Good dealings have mirrored positive results for Larsen & Toubro Infotech Limited (LTI) in the 2nd Quarter. In terms of constant currency, the earnings of the firm have swelled by 2.3% sequentially. The rise in the revenue was well par of what the Street had estimated. The stocks of the IT-firm sustained its growth by rising 4.5% in spite of a steep run-up of 77% this year.
The overall rise of most IT-service based companies was factored by the banking and finance vertical, as the banking and finance sector saw a significant rise in revenues of about 9.5%. LTI’s sequential rise of revenue in the manufacturing vertical, at about 5.4%, highlights a positive trend. Whereas, there was a dip in revenue of hi-tech, media, and retail/pharma verticals. The firm’s overall growth of 3.6% is still a significant improvement keeping in mind that the Street had predicted its sequential growth of about 2-2.5% only.
As a better pricing environment is seen within the firm, LTI has managed to overwhelm Street’s predictions in this section too. There has been a significant improvement in the margin of the offshore mix drive.
The Street may raise the upgrade earnings of the upcoming financial year of LTI as the growth was quite significant in this quarter. Analysts may raise the earnings estimate by 4-5% for the impending year while revenues may also see a upward push.
As the sequential revenue growth of LTI had dipped by 4.8% in the first quarter, the second half is extremely important to be observed as some of previous quarter’s inconsistent revenue growth may have also played a role in the second quarter (Q2).
Some of the margins that saw improvement are quite sustainable which must assist to maintain the enhanced profitability. However, in the impending quarters, the trade analysts have predicted a decline in margins.