ICICI Securities Maintains 'Hold' Rating, Targets Rs 4200

ICICI Securities Maintains HOLD Rating on LTM with Ambitious Growth Targets

ICICI Securities has released a research report on Larsen & Toubro Infotech (LTM), highlighting the company's ambitious growth targets for the next five years. LTM aims to achieve 2x revenue growth over FY26-31, translating to a 15% compound annual growth rate (CAGR). This is a significant increase from the 6% year-over-year (YoY) growth seen in FY26 and the 12% CAGR delivered over FY21-26.

Despite facing sector headwinds, LTM is seeing a 20-25% deflation in traditional IT services, which is offset by vendor consolidation and new AI-led spends. To drive growth, LTM has focused on winning large deals, with 10 large deals secured in FY26, representing a 100% year-over-year increase. The company is also strengthening its AI business revenue stream.

In terms of margin expansion, LTM targets a 200 basis points (bps) improvement in EBIT margin over FY26-31. This is contingent on revenue growth, which will be influenced by factors such as the de-linking of revenue and headcount, expected to grow by approximately 1.4x over FY26-31. Additionally, the company is expecting to leverage its selling, general, and administrative (SG&A) expenses and achieve AI productivity gains.

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ICICI Securities continues to value LTM at 19x its FY28E earnings, resulting in a target price of INR 4,200. The research firm maintains a HOLD rating on the stock.