L&T Infotech leads the show in mid-tier IT space
While most other IT services companies have reported strong growth over a lower base in FY21, L&T Infotech was the only company, which continued to perform despite a higher base
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Bengaluru: After a stellar second quarter results, L&T Infotech is likely to continue the growth momentum in the rest of this fiscal. Experts are also of the opinion that the mid-tier IT services company is expected to post sound performance in the next fiscal year.
In the quarter ended September, L&T Infotech posted 8.9 per cent growth in revenues in constant currency term over the preceding quarter. This growth came over a large base of FY21.
While most other IT services companies have reported strong growth over a lower base in FY21, L&T Infotech was the only company which continued to perform despite a higher base.
"What differentiates L&T Infotech from most other IT companies is the strong growth despite a tall base in FY21," wrote ICICI Securities on a note. L&T Infotech grew 18 per cent CAGR during September 2019-2021 period as compared to 14 per cent of Mindtree, 12 per cent of Infosys, seven per cent of TCS and six of HCL Technologies.
Share of offshore effort increased 90 basis points Q-o-Q to 83.6 per cent driving margin resilience in a post wage hike quarter. According to company's management, offshoring is likely to stay elevated on the back of the Great Resignation theme playing out globally.
"Typical seasonality of H2 (October-March) being better than H1 (April-September) is expected to continue in FY22. If L&T Infotech is able to achieve such exit-rate in H2, revenue growth in FY23 too will remain robust (around 24 per cent YoY in dollar term) even if demand moderates during FY23," ICICI Securities wrote in the note.
The IT firm's operating margin increased 80 basis points sequentially to 17.2 per cent led by positive operating leverage as selling, general and administrative expenses declined during the second quarter.
