4 May 2017 India | IT Services | Company Update

L&T Tech Services | HOLD

An imbalanced equation

L&T Technology Services (LTTS) reported 4QFY17 a tad weaker than our estimates due to an Pankaj Kapoor
pankaj.kapoor@jmfl.com | Tel: (91 22) 66303089
unexpectedly sharp decline in margin, likely due to costs associated with large deals won
during the quarter. While the healthy order backlog + pipeline should help LTTS improve on
the soft 3.4% USD revenue growth reported in FY17, the high back-fill nature of engineering
services business could keep the organic revenue growth in FY18 below the managements
double-digit target, in our view. Margins management pose a greater challenge given the
headwinds from INR appreciation + higher onsite delivery. Thus, the 10%/15% cut in our
FY18/FY19 EPS estimates. While we like the relatively benign growth outlook for engineering
services (vs. IT services) as a theme, LTTS rich valuations (19x FY18F PER; 10% premium to
Tier-1 IT players) + low float (10%) constrain us from turning constructive on the stock. We Recommendation and Price Target
maintain HOLD; our price target is lowered to INR 690 (INR 780 earlier) on earning revisions. Current Reco. HOLD
Previous Reco. HOLD
4QFY17 margins disappoint: Consolidated revenues grew 0.9% QoQ to USD 121.3bn Current Price Target (12M) 690
(on convenience translation at quarter average INR/USD rate) in-line with our estimates. Upside/(Downside) -12.3%
EBIT margin declined to 16.5% (-151bps QoQ) due to INR appreciation (-70bps impact); Previous Price Target 780
Change -11.5%
costs related to deal perusal/acquisition (-40bps, largely one-time); and higher headcount/
subcontractor costs (20bps each). Among business segments, process engineering stayed Key Data LTTS IN
weak (-8% QoQ); telecom recovered (+11% QoQ) after the weak 3Q; transportation, Current Market Price Rs787
industrial products and medical devices were broadly stable. Consolidated PAT at INR Market cap (bn) Rs80.0/US$1.2
970mn (-11% QoQ), was below estimates (INR 1,009mn), also on lower FX income. Free Float 10%
Shares in issue (mn) 107.2
FY18 deal flows could bring back the momentum: LTTS exuded confidence for a Diluted share (mn) 107.2
double-digit growth in FY18 on the back of strong deal wins; it reported a USD 300mn+ 3-mon avg daily val (mn) Rs37.6/US$0.0
52-week range 931/729
order backlog executable over FY18, excluding a large deal it expects to close during
Sensex/Nifty 30,054/9,338
1QFY18. Overall, it has USD 350mn+ TCV of deals in the pipeline. LTTS sees positive Rs/US$ 64.2
momentum in all verticals transportation, telecom/hi-tech and industrial products
except process engineering where while it believes the client-specific issues (that affected Price Performance
% 1M 6M 12M
growth in FY17) have bottomed out, the visibility on recovery is still low. That said,
Absolute 0.2 2.6 0.0
engineering services have higher project/revenue attrition and slower deal ramp-ups than Relative* -0.3 -6.8 0.0
IT services that could constrain the reported growth. Our forecasts build in 8%/8.5% * To the BSE Sensex
organic USD revenue growth 12.4%/9.2% with the Esencia acquisition - for FY18/FY19.
But margin management could be tough. LTTS expects to manage the INR appreciation
impact through a tighter bench + operating leverage. However, it did not provide an
EBITDA margin band adjusted for current INR levels vs 18-19% guided earlier. We believe
margin management also faces challenges from initial costs of recent large deal wins +
integration costs of Esencia acquisition. We expect reported FY18/FY19 EBIT margin at
16.8%/17.3% (vs. 18% in FY17). Thus, our revised EPS estimates for FY18/FY19 are
lower by 10%/15% respectively despite building in modest FX hedge gains.
Rich valuations are a dampener. LTTS trades at 35% premium to Cyient (CYNT IN; NR),
the closest peer, and a 1030% premium to tier-1 IT players. Our revised INR 690 TP is at
15x target PER and implies a 1.9x PEG (based on FY1720E EPS).

Financial Summary (Rs mn)

Y/E March FY15A FY16A FY17A FY18E FY19E
Net Sales 26,187 30,662 32,483 35,677 39,242
Sales Growth (%) 0.0 17.1 5.9 9.8 10.0
EBITDA 3,988 5,194 5,847 5,982 6,778
EBITDA Margin (%) 15.2 16.9 18.0 16.8 17.3 JM Financial Research is also available on:
Adjusted Net Profit 3,110 4,186 4,251 4,436 4,756 Bloomberg - JMFR <GO>,
Diluted EPS (Rs.) 22.6 32.3 39.6 41.4 44.4 Thomson Publisher & Reuters
Diluted EPS Growth (%) 0.0 42.6 22.8 4.3 7.2
S&P Capital IQ and FactSet
ROIC (%) 50.4 31.0 31.2 27.6 28.6
ROE (%) 59.1 39.5 33.3 27.8 25.5
P/E (x) 34.8 24.4 19.9 19.0 17.7 Please see Appendix I at the end of this
P/B (x) 10.3 9.6 5.7 5.0 4.2 report for Important Disclosures and
EV/EBITDA (x) 21.4 16.3 14.1 13.7 11.8 Disclaimers and Research Analyst
Dividend Yield (%) 1.5 2.3 0.8 1.2 1.4
Source: Company data, JM Financial. Note: Valuations as of 04/May/2017
Certification.

JM Financial Institutional Securities Limited

L&T Tech Services 4 May 2017

Exhibit 1. Key Financials

4Q16 FY16 1Q17 2Q17 3Q17 4Q17 FY17 Comments
Cons. revenues (USD m) 118.8 468.3 120.0 122.9 120.2 121.3 484.3
Change (YoY/QoQ) 0.3% 9.3% 1.0% 2.4% -2.2% 0.9% 3.4% Revenue for the quarter increased by 0.9% QoQ in
Cons. revenues (INR m) 8,014 30,662 8,029 8,227 8,104 8,123 32,483 USD terms (JMFe +0.8%); Reported constant
Change (YoY/QoQ) 2.7% 17.1% 0.2% 2.5% -1.5% 0.2% 5.9% currency growth was 3.1% QoQ; however, we
believe that is not comparable to CC growth
Cost of revenues 5,044 19,681 5,208 5,228 5,250 5,272 20,958
reported by other companies due to differences in
Gross profit 2,970 10,981 2,821 2,999 2,854 2,851 11,525
Gross margin 37.1% 35.8% 35.1% 36.5% 35.2% 35.1% 35.5% calculation methodologies

Total operating expense 1,516 5,787 1,331 1,437 1,397 1,513 5,678 FY17 revenue grew 3.4% YoY in USD terms; cc
Operating profit (EBITDA) 1,454 5,194 1,490 1,562 1,457 1,338 5,847 growth, as reported, was 4.6%
Operating margin 18.1% 16.9% 18.6% 19.0% 18.0% 16.5% 18.0%

EBITDA margin for 4QFY17 declined by 151bps QoQ

Depreciation & amortization 179 589 178 151 149 147 625
EBIT 1,275 4,605 1,312 1,411 1,308 1,191 5,222 to 16.5% due to increase in: delivery headcount (-
EBIT margin 15.9% 15.0% 16.3% 17.2% 16.1% 14.7% 16.1% 20bps), sub-contractor costs (-20bps), SG&A
expenses (-40bps) and INR appreciation (-70 bps).
Other income 105 820 226 144 165 35 570
Profit before tax 1,380 5,425 1,538 1,555 1,473 1,226 5,792
EBITDA margin for FY 17 expanded by 110bps YoY
Income tax expense 289 1,239 458 436 387 261 1,542
Net income from operations 1,091 4,186 1,080 1,119 1,086 965 4,250 to 18%
Share of minority interest -1 0 -3 0 -1 5 1
PAT 1,090 4,186 1,077 1,119 1,085 970 4,251 4QFY17 FX gain was nil, vs a gain of INR 140mn in
Change (YoY/QoQ) -16.5% 34.6% -1.2% 3.9% -3.0% -10.6% 1.6% 3QFY17
Adjusted diluted EPS 8.55 32.29 9.51 10.73 10.26 9.13 39.64
Change (YoY/QoQ) -19.4% 42.6% 11.2% 12.8% -4.4% -11.0% 22.8%
Source: Company, JM Financial

Management commentary: Key takeaways

FY18 growth outlook: LTTS expects a double-digit USD organic revenue growth in FY18,
helped by the recent large deal wins. It announced 3 such wins in 4QFY17 - a USD c24mn
TCV/3-years deal win with a US based technology firm; a multi-million dollar joint deal
with Microsoft and a large deal that is in final stages of closure (revenue to flow from
2QFY18). LTTS reported an order backlog of USD 300mn+ for FY18 and a strong deal
pipeline of USD 350+mn.

Margin outlook: LTTS did not provided a target EBITDA margin band for FY18 adjusted
for the recent INR appreciation (versus 18-19% band mentioned earlier). That said, it
exuded confidence in managing the recent INR appreciation through a tighter bench
management LTTS expects to minimal net headcount addition over FY18 and
operating leverage as revenue growth picks-up.

Esencia Technologies acquisition: LTTS announced acquisition of US based Esencia

Technologies Inc, a provider of design services in digital signal processing. Acquisition cost
is USD 27mn: USD 15mn to be paid upfront and balance 12mn to be paid over the
course of 4 years based on its performance. Management indicated Esencias current
revenue run-rate at USD 20mn with margins comparable to LTTS organic margins and a
total headcount of c100 employees based out of the US. The acquisition is expected to be
integrated with effect from the first week of June 2017.

IP revenues: IP revenues were nil in 4QFY17; USD 4mn in FY17. The total no of patents
stood at 254 with 57 owned by LTTS. It plans to monetize 4 of the self-owned patents by
developing industrial applications around them. It reported the share of total digital
engineering revenues, including the IP based revenues, at 12.5% in FY17 with a 25%
YoY growth.
Others: LTTS declared a final dividend of INR 4 per share which translates to total
dividend of INR 7 for FY17 (c20% pay-out ratio). It reiterated a policy of paying out up to
35% of profit as dividends.

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L&T Tech Services 4 May 2017

Exhibit 2. Costs related to recent large deal wins/perusals pushed affeced 4QFY17 EBITDA margin by 40bps
Employee expenses as % of sales Other operating expenses as % of sales

65.5% 19.5%

65.0% 19.0%

18.5%
64.5%
18.0%
64.0%
17.5%
63.5%

18.9%
64.9%
64.9%

64.8%

18.6%
17.0%
63.0%
16.5%

17.5%
63.5%

17.2%
62.5%
62.9%

16.0%

16.6%
62.0% 15.5%
61.5% 15.0%
4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17

Source: Company, JM Financial

Exhibit 3. Verticles portfolio

4Q16 1Q17 2Q17 3Q17 4Q17 Comments
Distribution
Telecom revenue grew 11%+% in USD terms QoQ;
Transportation 31.6% 32.2% 32.9% 34.0% 33.4%
process engineering declined 8% while Medical
Process Engineering 17.7% 16.3% 15.2% 15.5% 14.1%
Industrial Products 26.4% 25.9% 25.5% 26.6% 26.9% devices (-1% QoQ), Transportation (-1%) and
Medical devices 6.3% 7.0% 6.7% 6.7% 6.6% Industrial products (+2%) were broadly stable
Telecom 18.0% 18.6% 19.6% 17.2% 19.0%
Revenue (INR mn and QoQ growth)
Management indicted a positive momentum/deal
Transportation 2,537 2,584 2,710 2,737 2,709
pipeline in Transportation, Industrial products, and
Change 10.6% 1.9% 4.9% 1.0% -1.0%
Process Engineering 1,420 1,307 1,250 1,258 1,147 Telecom/ Hi-Tech verticals
Change -1.8% -8.0% -4.4% 0.6% -8.8%
Industrial Products 2,114 2,080 2,102 2,153 2,189 Process engineering segment had a soft FY17 due to
Change 5.6% -1.6% 1.1% 2.4% 1.7% specific issues in 3 large clients; LTTS indicated those
Medical devices 502 561 554 543 538
issues have bottomed out though visibility on growth
Change 5.9% 11.8% -1.2% -2.0% -0.9%
Telecom 1,441 1,497 1,611 1,413 1,540 is still low
Change -9.2% 3.9% 7.6% -12.3% 9.0%
Source: Company, JM Financial

Exhibit 4. Key client metrics

4Q16 1Q17 2Q17 3Q17 4Q17 Comments
Active clients 215 203 216 217 223
Revenue concentration
Top 5 clients 22.8% 24.2% 23.6% 23.4% 23.2%
Top 10 clients 36.2% 37.8% 36.3% 35.5% 35.6%
Top 20 clients 53.8% 53.8% 52.1% 51.7% 51.5%
Revenue growth LTTS added 14 new clients (gross) in 4QFY17 vs 13
Top 5 clients -0.2% 7.2% -0.1% -3.1% 0.0%
in 3QFY17
Top 6 to 10 clients -0.5% 2.5% -4.4% -6.8% 3.4%
Top 10 clients -0.3% 5.5% -1.6% -4.4% 1.2%
Top 10-20 clients -0.3% -8.2% 1.1% 0.3% -1.0% Revenue from top 5 clients remained flat in 4QFY17
Top 20 clients -0.3% 1.0% -0.8% -3.0% 0.5% on QoQ basis while revenue from top 10 and top 20
Relationship distribution clients increased by 1.2% and 0.5% respectively
US$1mn+ 44 50 53 53 49
Change -2% 14% 6% 0% -8%
LTTS ramped up one of the existing client into USD
US$5mn+ 17 18 18 18 21
Change -6% 6% 0% 0% 17% 30mn+ revenue bucket
US$10mn+ 8 7 7 7 6
Change 0% -13% 0% 0% -14%
US$20mn+ 3 2 2 3 2
Change 0% -33% 0% 50% -33%
US$30mn+ 0 1 1 0 1
Change 0% 100% 0% -100% 100%
Source: Company, JM Financial

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L&T Tech Services 4 May 2017

Exhibit 5. Key manpower and execution metrics

4Q16 1Q17 2Q17 3Q17 4Q17 Comments
Manpower Base Net addition in 4QFY 17 was 423 employees - 377
Total headcount 9,406 9,419 9,599 10,040 10,463
for delivery and 46 for sales and support
Delivery headcount 8,578 8,587 8,739 9,160 9,537
Sales and support 828 832 860 880 926
Gross additions for FY17 was 824 - 629 lateral hires
Net additions -38 13 180 441 423
- As % of opening base -0.4% 0.1% 1.9% 4.6% 4.2% and 195 freshers
Operating metrics
Utilization - IT services (inc. trainees) 74.9% 76.1% 78.4% 75.1% 74.2% FY18 wage hike will be effective from October2017
Attrition - quarterly annualized 12.1% 13.2% 14.6% 14.0% 14.0%
Source: Company, JM Financial

Exhibit 6. Geogrpahy portfolio

4Q16 1Q17 2Q17 3Q17 4Q17 Comments
Distribution
North America 61.0% 63.5% 62.3% 62.5% 63.3%
Europe 20.1% 20.2% 19.5% 19.2% 17.3%
India 9.3% 6.8% 7.4% 8.1% 9.2% Revenue from India /North America/Europe grew by
RoW 9.6% 9.4% 10.7% 10.2% 10.2% 14.6%/ 2.2%/ -9.1% respectively in USD terms QoQ
Revenue (USD mn and QoQ growth)
North America 72 76 77 75 77
Change 0.1% 5.1% 0.5% -1.9% 2.2% Revenue % earned in USD/EUR/INR and GBP stood at
Europe 24 24 24 23 21 77%/12%/6.5% and 2% respectively for 4QFY17
Change 3.3% 1.5% -1.1% -3.7% -9.1%
India 11 8 9 10 11
Change 18.0% -26.1% 11.5% 7.0% 14.6%
RoW 11 11 13 12 12
Change -16.3% -1.1% 16.6% -6.8% 0.9%
Source: Company, JM Financial

Exhibit 7. What has changed in our forecasts and assumptions?

Old New Change
FY18F FY19F FY20F FY18F FY19F FY20F FY18F FY19F FY20F
Exchange rate (INR/USD) 68.00 68.00 - 65.51 66.00 67.00 -3.7% -2.9% -
A. OPERATIONAL ASSUMPTIONS
Total employees 11,016 11,990 - 10,542 11,462 12,501 -4.3% -4.4% -
Utilization - Inc. trainees 76.5% 77.0% - 75.4% 76.0% 75.5% -106bp -100bp -
Change in total billed effort (YoY) 10.0% 9.4% - 8.1% 8.3% 8.1% -190bp -109bp -
Billed effort share - onsite 26.0% 25.8% - 28.1% 28.0% 27.5% 206bp 225bp -
Change in blended realization (YoY) 0.5% 1.1% - 0.1% 0.2% 0.6% -48bp -90bp -
B. FINANCIAL FORECASTS
Revenue (US m) 538 595 - 545 595 650 1.2% -0.1% -
Growth in USD revenues (YoY) 10.6% 10.6% - 12.4% 9.2% 9.3% 187bp -145bp -
Revenue (INR m) 36,589 40,481 - 35,677 39,242 43,529 -2.5% -3.1% -
SG&A as % of revenue 17.7% 17.0% - 18.2% 17.5% 16.9% 46bp 45bp -
EBITDA 6,849 7,670 - 5,982 6,778 7,712 -12.7% -11.6% -
EBITDA margin 18.7% 18.9% - 16.8% 17.3% 17.7% -195bp -167bp -
EPS 45.9 52.0 - 41.4 44.4 49.9 -9.9% -14.7% -
Capex (USD m) 13 13 - 13 13 15 0.5% 2.8% -
Source: JM Financial

Exhibit 8. How we differ from consensus

Consensus JMFe Difference
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Sales (INR m) 36,332 41,167 49,551 35,677 39,242 43,529 -2% -5% -12%
EBITDA 6,880 7,859 9,491 5,982 6,778 7,712 -13% -14% -19%
EBITDA margin 18.9% 19.1% 19.2% 16.8% 17.3% 17.7%
Net Income (INR m) 5,139 5,782 6,785 4,436 4,756 5,355 -14% -18% -21%
EPS (INR) 49.3 55.4 64.1 41.4 44.4 49.9 -11% -15% -17%
Source: JM Financial, Bloomberg

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L&T Tech Services 4 May 2017

Exhibit 9. LTTS 12 month forward PER band

LTTS currently trades at 18.5 12M
1000.0 forward EPS
950.0
900.0
850.0
800.0
750.0
700.0
650.0
600.0
Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17

Price 16X 18X 20X

Source: Company, JM Financial, Bloomberg

Key Risks
Key downside risks to our price target are: (1) rupee appreciation beyond our assumed
levels and/or adverse cross-currency movements; (2) a strong regulatory action against
outsourcing in the US; and (3) slower decision making on deal awards. Risks specific to
LTTS include: 1) lower R&D budgets; 2) increased use of captives versus third-party firms;
and 3) client concentration risks.
Key upside risks could come from: (1) rupee depreciation at a pace faster than our
assumption; (2) a faster-than-expected recovery in project awards/ramp-up; (3) large deal
wins ahead of numbers or the contract value in our estimates; and (4) acquisitions/large
deal wins that are not built into our model.

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L&T Tech Services 4 May 2017

Financial Tables (Consolidated)

Income Statement (Rs mn) Balance Sheet (Rs mn)
Y/E March FY15A FY16A FY17A FY18E FY19E Y/E March FY15A FY16A FY17A FY18E FY19E
Net Sales 26,187 30,662 32,483 35,677 39,242 Shareholders Fund 10,521 10,656 14,852 17,034 20,331
Sales Growth 0.0% 17.1% 5.9% 9.8% 10.0% Share Capital 10,500 3,000 203 203 203
Other Operating Income 0 0 0 0 0 Reserves & Surplus 21 7,656 14,649 16,831 20,128
Total Revenue 26,187 30,662 32,483 35,677 39,242 Preference Share Capital 0 0 0 0 0
Cost of Goods Sold/Op. Exp 17,167 19,681 20,958 23,207 25,601 Minority Interest 0 0 0 0 0
Personnel Cost 0 0 0 0 0 Total Loans 2,257 2,015 1,019 1,019 919
Other Expenses 5,032 5,787 5,678 6,487 6,864 Def. Tax Liab. / Assets (-) -367 -1,061 -323 -323 -323
EBITDA 3,988 5,194 5,847 5,982 6,778 Total - Equity & Liab. 12,411 11,610 15,548 17,730 20,927
EBITDA Margin 15.2% 16.9% 18.0% 16.8% 17.3% Net Fixed Assets 5,696 6,352 6,161 7,315 7,452
EBITDA Growth 0.0% 30.2% 12.6% 2.3% 13.3% Gross Fixed Assets 832 1,071 1,190 1,372 1,509
Depn. & Amort. 485 589 625 646 746 Intangible Assets 4,860 5,138 4,948 5,920 5,920
EBIT 3,504 4,605 5,222 5,336 6,033 Less: Depn. & Amort. 0 0 0 0 0
Other Income 219 820 570 741 483 Capital WIP 4 143 23 23 23
Finance Cost 0 0 0 0 0 Investments 0 0 0 0 0
PBT before Excep. & Forex 3,722 5,425 5,792 6,076 6,515 Current Assets 12,080 12,075 15,041 16,625 20,305
Excep. & Forex Inc./Loss(-) 0 0 0 0 0 Inventories 0 0 0 0 0
PBT 3,722 5,425 5,792 6,076 6,515 Sundry Debtors 6,853 7,259 7,106 7,722 8,494
Taxes 610 1,239 1,542 1,641 1,759 Cash & Bank Balances 1,153 1,389 2,620 3,065 5,391
Extraordinary Inc./Loss(-) 0 0 0 0 0 Loans & Advances 0 0 0 0 0
Assoc. Profit/Min. Int.(-) 2 0 -1 0 0 Other Current Assets 4,074 3,427 5,315 5,838 6,421
Reported Net Profit 3,110 4,186 4,251 4,436 4,756 Current Liab. & Prov. 5,365 6,817 5,654 6,210 6,831
Adjusted Net Profit 3,110 4,186 4,251 4,436 4,756 Current Liabilities 1,689 2,202 1,847 2,029 2,231
Net Margin 11.9% 13.7% 13.1% 12.4% 12.1% Provisions & Others 3,676 4,615 3,807 4,181 4,599
Diluted Share Cap. (mn) 137.4 129.6 107.2 107.2 107.2 Net Current Assets 6,715 5,258 9,387 10,415 13,475
Diluted EPS (Rs.) 22.6 32.3 39.6 41.4 44.4 Total Assets 12,411 11,610 15,548 17,730 20,927
Diluted EPS Growth 0.0% 42.6% 22.8% 4.3% 7.2% Source: Company, JM Financial
Total Dividend + Tax 1,858 2,732 851 1,216 1,459
Dividend Per Share (Rs) 11.6 18.0 6.6 9.4 11.3
Source: Company, JM Financial

Cash Flow Statement (Rs mn) Dupont Analysis

Y/E March FY15A FY16A FY17A FY18E FY19E Y/E March FY15A FY16A FY17A FY18E FY19E
Profit before Tax 3,722 5,425 5,792 6,076 6,515 Net Margin 11.9% 13.7% 13.1% 12.4% 12.1%
Depn. & Amort. 485 589 625 646 746 Asset Turnover (x) 4.1 2.4 2.3 2.1 2.0
Net Interest Exp. / Inc. (-) -219 -820 -570 -741 -483
Leverage Factor (x) 1.2 1.2 1.1 1.1 1.1
Inc (-) / Dec in WCap. -4,841 1,334 -2,937 -551 -699
RoE 59.1% 39.5% 33.3% 27.8% 25.5%
Others 0 0 0 0 0
Taxes Paid -978 -1,933 -804 -1,641 -1,759 Key Ratios
Y/E March FY15A FY16A FY17A FY18E FY19E
Operating Cash Flow -1,831 4,596 2,106 3,791 4,320
Capex -6,181 -1,245 -434 -1,801 -883 BV/Share (Rs.) 76.6 82.2 138.5 158.8 189.6

Free Cash Flow -8,011 3,351 1,672 1,990 3,437 ROIC 50.4% 31.0% 31.2% 27.6% 28.6%

Inc (-) / Dec in Investments 0 0 0 0 0 ROE 59.1% 39.5% 33.3% 27.8% 25.5%

Others -501 1,178 609 709 447 Net Debt/Equity (x) 0.1 0.1 -0.1 -0.1 -0.2

Investing Cash Flow -6,682 -67 175 -1,092 -435 P/E (x) 34.8 24.4 19.9 19.0 17.7

Inc / Dec (-) in Capital 10,500 -7,500 -2,797 0 0 P/B (x) 10.3 9.6 5.7 5.0 4.2

Dividend + Tax thereon -3,089 3,449 2,742 -2,254 -1,459 EV/EBITDA (x) 21.4 16.3 14.1 13.7 11.8

Inc / Dec (-) in Loans 2,257 -242 -996 0 -100 EV/Sales (x) 3.3 2.8 2.5 2.3 2.0

Others -2 0 1 0 0 Debtor days 96 86 80 79 79

Financing Cash Flow 9,666 -4,293 -1,050 -2,254 -1,559 Inventory days 0 0 0 0 0

Inc / Dec (-) in Cash 1,153 236 1,231 445 2,326 Creditor days 28 32 25 25 25

Opening Cash Balance 0 1,153 1,389 2,620 3,065 Source: Company, JM Financial

Closing Cash Balance 1,153 1,389 2,620 3,065 5,391

Source: Company, JM Financial

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L&T Tech Services 4 May 2017

History of Earnings Estimate and Target Price Recommendation History

FY18E FY19E Target
Date % Chg. % Chg. % Chg.
EPS (Rs) EPS (Rs) Price

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L&T Tech Services 4 May 2017

APPENDIX I

JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U65192MH1995PLC092522
Member of BSE Ltd. and National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: BSE - INZ010012532, NSE - INZ230012536 and MSEI - INZ260012539, Research Analyst INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com

Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%

Research Analyst(s) Certification

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