L&T Technology Services (LTTS IN)

Rating: ACCUMULATE | CMP: Rs1,693 | TP: Rs1,780

January 17, 2019 Strong performance across all parameters

Q3FY19 Result Update Post strong performance in Q3FY19, we upgrade LTTS USD revenue growth
to 24.5% (earlier 24%) for FY19E. However, we downgrade USD revenue
☑ Change in Estimates |  Target |  Reco growth for FY20E to 17% (earlier 17.8%, client specific issues) and maintain
15.9% for FY21E. Our USD/INR assumptions are at 70/70.5/72 for
Change in Estim ates FY19/FY20/FY21E. We model our EBIDTA margin assumptions at
Current Previous 17.6/17.9/18% for FY19/FY20/21E. Our EPS estimates are at Rs70.5/75/87 for
FY20 E FY21 E FY20 E FY21E
FY19/20/21E, revised by +2%/-1.5%/+0.2% respectively. Stock trades at 22.3x
Rating ACCU MUL ATE ACCUMULATE
Target Price 1,780 1,780 FY20E and 20.9x Sep20E EPS. We maintain our TP at Rs1780 (22x Sep20E
Sales (Rs. m) 60,848 70,999 61,017 68,734 EPS). Retain Accumulate.
% Chng. (0.3) 3.3
EBITDA (Rs. m) 10,878 12,780 10,908 12,555
% Chng. (0.3) 1.8 Broad based revenue growth: LTTS reported a strong result for Q3FY19 with a
EPS (Rs.) 77.5 87.0 76.0 86.0 beat on Constant currency, USD revenues EBIDTA margin. Revenues for Q3FY19
% Chng. (1.5) 0.2
came at USD186mn up 4.8% QoQ and above our estimates (PLe: USD183mn).
Constant currency revenue growth for the quarter stood at 4.6% QoQ and up 25.2%
Key Financials YoY (Ple: 3.8% QoQ). This is very strong constant currency growth delivered by
FY18 FY19E FY20E FY21E LTTS. Among verticals, growth was broad based across all verticals. Process
Sales (Rs. m) 37,471 50,689 60,848 70,999 Industry (up 6.1% QoQ), Telecom & Hi-Tech (up 6% QoQ) and Transport vertical
EBITDA (Rs. m) 5,811 8,934 10,878 12,780
(up 3.9% QoQ) drove growth on vertical fronts. Among geographies, North America
Margin (%) 15.5 17.6 17.9 18.0
PAT (Rs. m) 5,072 7,408 7,945 9,223 remain strong and delivered 5% QoQ growth and India was up 21.3% QoQ.
Basic EPS (Rs.) 49.5 72.3 77.5 90.0 However, Europe (down 1.3%) remains tepid during the quarter. Management has
Gr. (%) 18.2 46.1 7.2 16.1 revised USD revenue growth guidance to 24% (earlier 21%) for FY19E. We note
DPS (Rs.) 15.9 23.9 25.6 29.7
that LTTS would require 1.2% QoQ growth in Q4 to achieve 24% USD revenue
Yield (%) 0.9 1.4 1.5 1.8
RoE (%) 29.6 34.3 30.3 29.4
growth. We believe the guidance is conservative and company will easily surpass
RoCE (%) 28.3 33.3 29.6 28.8 the guidance.
EV/Sales (x) 4.6 3.3 2.7 2.3
EV/EBITDA (x) 29.3 18.9 15.3 12.8 Concern on Client Specific Issue: As per management commentary, there is
PE (x) 34.2 23.4 21.8 18.8
change in ownership of one account and new owner is rethinking outsourcing
P/BV (x) 9.0 7.3 6.1 5.1
strategy which can result in takeover one of LTTS client engagement with effect
from March’19. Management guided that this can impact growth momentum of
Key Data LTEH.BO | LTTS IN LTTS by maximum of 4%. Management also cited that excluding this account, LTTS
52-W High / Low Rs.1,855 / Rs.976 can deliver revenue growth in high-teen digits. We note that this impact of LTTS
Sensex / Nifty 36,374 / 10,905
revenue growth momentum can be negated by continuously increasing deal sizes
Market Cap Rs.176bn/ $ 2,479m
Shares Outstanding 104m with existing clients and broad based focused strategy on verticals.
3M Av g. Daily Value Rs.322.39m
Consistent Margin Improvement and PAT beat: EBIDTA margin for the quarter
Shareholding Pattern (%) came at 18.4% up 30bps and above our estimates (Ple: 18.1%) led by lower SG&A
expenses during the quarter driven by larger revenue. We note that Utilisation level
Promoter’s 80.66
Foreign 3.87 at all-time high stood at 81.4% for Q3FY19 (vs 80.4% in Q2FY19) have also aided
Domestic Institution 4.32 margins. Revenue mix moved to offshore stood at 52.6% down 30bps QoQ. PAT
Public & Others 11.15
Promoter Pledge (Rs bn) -
for the quarter came at Rs1861mn up 47% YoY and above our estimates (Ple:
1761mn). PAT beat was aided by margin beat and higher other income.
Management remained bullish on growth opportunities across verticals with strong
Stock Performance (%)
momentum in Automotive (driven by Advanced driver less cars, Electric vehicles),
1M 6M 12M
Absolute 2.9 30.2 69.8
Semiconductor (IoT). Management also cited that supply constraints in developed
Relativ e 2.6 30.7 63.7 markets is also leading to strong demand opportunities for LTTS.

Strong Deal Pipeline: During the quarter, management cited that it has won 6 large
Rajat Gandhi deals verticals. Management remained bullish on growth opportunities across
rajatgandhi@plindia.com | 91-22-66322246
verticals with strong momentum in Automotive (driven by Advanced driver less cars,
Electric vehicles), Semiconductor (IoT). Management also cited that supply
constraints in developed markets is also leading to strong demand opportunities for
LTTS.

January 17, 2019 1

 L&T Technology Services

Exhibit 1 : Q3FY19: Beat on USD revenues, Margins and PAT

Fig in R m n 3QFY19 2QFY19 QoQ gr. 3QFY18 YoY gr. PL Estim ates Variance
Revenues(USD mn) 186 177 4.8% 151 23.0% 183 2%
Revenues 13,169 12,661 4.0% 9,691 35.9% 13,020 1%
EBIDTA 2,417 2,288 5.6% 1,485 62.8% 2,383 1%
EBIDTA margin (%) 18.4% 18.1% 15.3% 18.3%
PAT 1,861 1,918 -3.0% 1,265 47.1% 1,761 6%
PAT margin (%) 14.1% 15.1% 13.1% 13.5%

Source: Company, PL

Exhibit 2 : Sustain Revenues growth of 4-5% QoQ in three quarters of FY19

10.0% 8.8% 8.4%

8.0% 7.3%
5.8%
6.0% 4.9% 4.8%
4.3%
4.0%
2.3%
2.0% 1.1%
0.4% 0.6%
0.0%
0.0%
-0.4%
-2.0%
-2.2%
-4.0%
Q3FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

2QFY18

4QFY18

1QFY19

2QFY19

3QFY19
Q2FY16

Q4FY16

1QFY18

3QFY18
Source: Company, PL

Exhibit 3 : Maintained USD revenue growth above 20% YoY in FY19

USD Revenues Growth YoY (%)

200.0 185.7 40.0%

177.2
180.0 168.9 35.0%
162.0
160.0 151.0 30.0%
139.3
140.0 123.0 120.2 121.0 128.0 25.0%
120.0 20.0%
100.0 15.0%
80.0 10.0%
60.0 5.0%
40.0 0.0%
Q3FY17

Q4FY17

1QFY18

3QFY18

4QFY18

2QFY19

3QFY19
Q2FY17

2QFY18

1QFY19

Source: Company, PL

January 17, 2019 2

 L&T Technology Services

Exhibit 4 : EBITDA Margin improved despite marginal INR Appreciation

EBITDA Margin (%) Average Exchange Rate

21.0%
19.7%

19.0%
25.0% 72.0

18.4%
18.1%

18.1%
18.0%

17.0%
16.5%

16.1%
15.9%

15.3%
15.3%

15.3%
20.0% 70.0

68.0
15.0%
66.0
10.0%
64.0
5.0% 62.0

0.0% 60.0

Q4FY17

1QFY18

2QFY18

3QFY18

4QFY18

1QFY19

2QFY19

3QFY19
Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17
Source: Company, PL

 Margins above estimates: EBITDA margin for the quarter stood at 18.4% up
30bps and 300bps YoY and beat our estimates (Ple: 18.3%). Margins
performance were strong despite being the partial effect of wage hikes during
the quarter. Utilisation level at all-time high stood at 81.3% up 100bps QoQ
and lower SG&A Expenses.

 Onsite Revenue mix moved up to 47.4% for the quarter (vs 47.1% in Q2FY19).

 Headcount stood at 14,777 employees for the quarter which implies strong net
addition of 1192 employees. Attrition rate for the quarter stood at 14.9% decline
10bps QoQ.

Operating Metrics:

Exhibit 5 : Vertical Mix of revenues remain flat QoQ (%)

Contribution by
Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Verticals
Transportation 29.4 31.6 32.2 32.9 34 33.4 33.6 32.3 30.9 30.8 30.9 32.0 31.7
Industrial products 25.6 26.4 25.9 25.5 26.6 26.9 25.5 23.6 21.8 20.9 20.4 20.6 20.2
Telecom & Hi-tech 20.3 18 18.6 19.6 17.2 19 20.1 24.3 27.9 29.5 28.7 26.7 27.0
Process Industry 18.5 17.7 16.3 15.2 15.5 14.1 13.9 12.8 12.7 12.3 13.5 14.2 14.4
Medical Devices 6.1 6.3 7 6.7 6.73 6.6 6.9 7 6.25 6.5 6.5 6.5 6.7
Total 100 100 100 100 100 100 100 100 100 100 100 100.0 100.0

Source: Company, PL

Exhibit 6 : Strong growth momentum in Medical, Process Industry & Telecom

Fig in USD m n 3QFY19 2QFY19 QoQ gr. 3QFY18 YoY gr.
Transportation 58.9 56.7 3.8% 46.7 26.2%
Industrial products 37.5 36.5 2.8% 32.9 14.0%
Telecom & Hi-tech 50.1 47.3 6.0% 42.1 19.0%
Process Industry 26.7 25.2 6.3% 19.2 39.4%
Medical Devices 12.4 11.5 8.0% 9.4 31.8%
Total Revenues 185.7 177.2 4.8% 150.3 23.5%
Source: Company, PL

January 17, 2019 3

 L&T Technology Services

Exhibit 7 : Geographical Mix

Contribution by
Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
geographies
North America 61.1 61 63.5 62.3 62.5 63.3 64.5 60.8 58.7 57.6 56.3 57.7 57.8
Europe 19.5 20.1 20.2 19.5 19.2 17.3 16.6 16.5 17.2 18.6 18.5 17.2 16.2
India 7.9 9.3 6.8 7.5 8.1 9.2 9.3 10.5 11.5 11.7 12.4 12.5 14.4
RoW 11.5 9.6 9.5 10.7 10.2 10.2 9.6 12.2 12.6 12.1 12.8 12.6 11.6
Total 100 100 100 100 100 100 100 100 100 100 100 100.0 100.0

Source: Company, PL

Exhibit 8 : Geography-wise revenues and Growth QoQ & YoY (%)

Fig in USD m n 3QFY19 2QFY19 QoQ gr. 3QFY18 YoY gr.
North America 107.3 102.2 5.0% 88.6 21.1%
Europe 30.1 30.5 -1.3% 26.0 15.8%
India 26.7 22.2 20.7% 17.4 54.0%
RoW 21.5 22.3 -3.5% 19.0 13.2%
Total Revenues 185.7 177.2 4.8% 151.0 23.0%
Source: Company, PL

Exhibit 9 : Utlilisation Rates at all-time high

Fig in % Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Including trainees 74.9 74.9 76.1 78.4 75.1 74.2 75.1 76.1 78.8 80.7 78.6 80.3 81.3

Source: Company, PL

Exhibit 10 : Client Concentration (%)

Clients Details Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Top 5 clients 22.9 22.8 24.2 23.6 23.4 23.2 23.8 26.8 28.8 28.6 28.3 28.2 27.4
Top 10 clients 36.4 36.2 37.8 36.3 35.5 35.6 37.0 39.8 41.2 41.4 40.5 39.9 38.9
Top 20 clients 54.1 53.8 53.8 52.1 51.7 51.5 52.6 54.9 56.4 56.7 55.6 55.1 54.4

Source: Company, PL

Exhibit 11 : Headcount implies strong net addition

Em ployee stats Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Total headcount 9444 9406 9419 9599 10040 10463 10805 11532 11941 12307 13081 13585 14777
Billable 8630 8578 8587 8739 9160 9537 9886 10573 11009 11360 12147 12604 13711
Sales & Support 814 828 832 860 880 926 919 959 932 947 934 981 1066
Voluntary attrition 10.7% 12.1% 13.2% 14.6% 14.0% 14.0% 13.4% 13.4% 13.2% 13.5% 15.4% 15.0% 14.9%

Source: Company, PL

January 17, 2019 4

 L&T Technology Services

Exhibit 12 : Consolidated Model Sheet of LTTS

FY15 FY16 FY17 FY18 FY19E FY20E FY21E
USD revenues (mn) 428 467 484 580 722 845 979
Grow th (%) NA 9.1% 3.8% 19.8% 24.5% 17.0% 15.9%
Average Exchange Rate (USD vs INR) 61 65.7 66.3 65.0 70.1 72.0 72.5

Consolidated Revenues (INR mn) 26,186 30,665 32,483 37,471 50,689 60,848 70,999
Grow th (%) NA 17.1% 5.9% 15.4% 35.3% 20.0% 16.7%

EBIDTA 3987 5204 5856 5811 8934 10878 12780

EBIT 3503 4615 5231 4923 7938 9875 11715
PAT 3109 4167 4249 5115 7408 7945 9223

EBIDTA margin (%) 15.2% 17.0% 18.0% 15.5% 17.6% 17.9% 18.0%
EBIT margin (%) 13.4% 15.1% 16.1% 13.1% 15.7% 16.2% 16.5%
PAT margin (%) 11.9% 13.6% 13.1% 13.7% 14.6% 13.1% 13.0%

Diluted EPS 46.81 32.10 39.64 48.18 70.48 75.25 87.36

EPS Grow th (%) -31.4% 23.5% 21.5% 46.3% 6.8% 16.1%

P/E 61.4 45.3 36.8 30.2 20.6 19.3 16.7

EV/EBIDTA 38 29 26 25 16 13 11
ROE(%) 22.9% 30.4% 33.8% 29.6% 34.3% 30.3% 29.4%

Consolidated Balance sheet (Rs m n)

Netw orth (R mn) 10521 10925 14852 19367 23832 28620 34179

Net cash on Balance sheet (Rs mn) -1083.95 -595.03 1599 3046 4448 6886 10158
Net cash per share (21.06) (5.85) 15.35 29.00 42.32 65.22 96.21
Net cash as a % of stock price -1.4% -0.4% 1.1% 2.0% 2.9% 4.5% 6.6%

Consolidated Cash flow (R m n)

Cash flow from Operations 2889 5337 3879 4136 5389 5771 7181
Capex 541 1,284 465 866 1,200 700 700
Acquisition Spent 6,096 - - 970 - - -
Free Cash Flow -3748 4053 3414 2300 4189 5071 6481
FCF/EBIDTA -94.0% 77.9% 58.3% 39.6% 46.9% 46.6% 50.7%

Source: Company, PL

January 17, 2019 5

 L&T Technology Services

Financials
Incom e Statement (Rs m ) Balance Sheet Abstract (Rs m )
Y/e Mar FY18 FY19E FY20E FY21E Y/e Mar FY18 FY19E FY20E FY21E
Net Revenues 37,471 50,689 60,848 70,999 Non-Current Assets
YoY gr. (%) 15.4 35.3 20.0 16.7
Employ ee Cost 24,600 32,272 39,706 46,149 Gross Block 4,404 5,604 6,304 7,004
Gross Prof it 12,871 18,417 21,142 24,850 Tangibles 2,020 2,380 2,800 3,220

Margin (%) 34.3 36.3 34.7 35.0 Intangibles 2,384 3,224 3,504 3,784
SG&A Expenses 7,060 9,484 10,264 12,070
Other Expenses - - - - Acc: Dep / Amortization 2,231 3,227 4,230 5,295
Tangibles 770 1,323 1,880 2,471

EBITDA 5,811 8,934 10,878 12,780 Intangibles 1,461 1,904 2,350 2,824

YoY gr. (%) (0.8) 53.7 21.8 17.5

Margin (%) 15.5 17.6 17.9 18.0 Net fixed assets 2,173 2,377 2,074 1,709
Tangibles 1,250 1,057 920 749
Depreciation and Amortization 888 996 1,003 1,065 Intangibles 923 1,320 1,154 960

EBIT 4,923 7,938 9,875 11,715 Capital Work In Progress 1 1 1 1

Margin (%) 13.1 15.7 16.2 16.5 Goodwill 4,921 4,921 4,921 4,921
Non-Current Inv estments 590 590 590 590

Net Interest 24 20 24 24 Net Def erred tax assets 243 243 243 243

Other Income 1,934 2,116 913 800 Other Non-Current Assets 487 487 487 487

Profit Before Tax 6,833 10,034 10,763 12,491 Current Assets

Margin (%) 18.2 19.8 17.7 17.6 Inv estments 2,207 2,307 2,407 2,507
Inv entories - - - -
Total Tax 1,712 2,601 2,798 3,248 Trade receiv ables 9,623 11,804 14,170 16,534

Effective tax rate (%) 25.1 25.9 26.0 26.0 Cash & Bank Balance 1,542 2,844 5,182 8,354
Other Current Assets 3,805 5,120 5,897 6,674

Profit after tax 5,121 7,432 7,965 9,243 Total Assets 27,051 32,353 37,831 44,080
Minority interest (6) 24 20 20
Share Prof it f rom Associate - - - - Equity
Equity Share Capital 205 205 205 205

Adjusted PAT 5,072 7,408 7,945 9,223 Other Equity 19,159 23,624 28,412 33,971

YoY gr. (%) 19.3 46.1 7.2 16.1 Total Networth 19,364 23,829 28,617 34,176
Margin (%) 13.5 14.6 13.1 13.0
Extra Ord. Income / (Exp) - - - - Non-Current Liabilities
Long Term borrowings - - - -

Reported PAT 5,072 7,408 7,945 9,223 Prov isions - - - -

YoY gr. (%) 19.3 46.1 7.2 16.1 Other non current liabilities - - - -

Margin (%) 13.5 14.6 13.1 13.0

Current Liabilities
Other Comprehensiv e Income - - - - ST Debt / Current of LT Debt 702 702 702 702

Total Comprehensiv e Income 5,072 7,408 7,945 9,223 Trade pay ables 1,807 2,444 2,934 3,424

Equity Shares O/s (m) 103 103 103 103 Other current liabilities 5,128 5,328 5,528 5,728

Basic EPS (Rs) 49.5 72.3 77.5 90.0 Total Equity & Liabilities 27,051 32,353 37,831 44,080
Source: Company Data, PL Research Source: Company Data, PL Research

January 17, 2019 6

 L&T Technology Services

Cash Flow (Rs m) Key Financial Metrics

Y/e Mar FY18 FY19E FY20E FY21E Y/e Mar
Year FY18 FY19E FY20E FY21E
PBT 6,778 10,010 10,743 12,471 Per Share(Rs)
Add. Depreciation 888 996 1,003 1,065 EPS 49.5 72.3 77.5 90.0
Add. Interest 23 (157) (524) (456) CEPS 58.1 82.0 87.3 100.4

Less Financial Other Income 1,934 2,116 913 800 BVPS 188.9 232.5 279.2 333.4
Add. Other (131) - - - FCF 22.4 40.9 49.5 63.2

Op. prof it bef ore WC changes 7,558 10,849 11,223 13,080 DPS 15.9 23.9 25.6 29.7

Net Changes-WC (1,701) (2,859) (2,653) (2,652) Return Ratio(%)

Direct tax (1,721) (2,601) (2,798) (3,248) RoCE 28.3 33.3 29.6 28.8

Net cash from Op. activities 4,136 5,389 5,771 7,181 ROIC 33.2 44.3 47.9 51.0
Capital expenditures (1,821) (1,200) (700) (700) RoE 29.6 34.3 30.3 29.4
Interest / Div idend Income 78 177 548 480 Balance Sheet
Others (261) (100) (100) (100) Net Debt : Equity (x) (0.2) (0.2) (0.2) (0.3)

Net Cash from Invt. activities (2,004) (1,123) (253) (320) Debtor (Day s) 94 85 85 85
Issue of share cap. / premium 2 - - - Valuation(x)
Debt changes (317) - - - PER 34.2 23.4 21.8 18.8

Div idend paid (983) (2,944) (3,157) (3,665) P/B 9.0 7.3 6.1 5.1
Interest paid (25) (20) (24) (24) P/CEPS 58.1 82.0 87.3 100.4

Others - - - - EV/EBITDA 29.3 18.9 15.3 12.8

Net cash from Fin. activities (1,323) (2,964) (3,181) (3,689) EV/Sales 4.6 3.3 2.7 2.3
Net change in cash 809 1,302 2,338 3,172 Div idend Y ield (%) 0.9 1.4 1.5 1.8
Free Cash Flow 2,300 4,189 5,071 6,481 Source: Company Data, PL Research
Source: Company Data, PL Research

Quarterly Financials (Rs m)

Y/e Mar Q4FY18 Q1FY19 Q2FY19 Q3FY19
Net Revenue 10,548 11,522 12,661 13,169
YoY gr. (%) 29.9 40.1 40.6 35.9
Raw Material Expenses 6,818 7,381 7,924 8,298
Gross Prof it 3,730 4,141 4,737 4,871
Margin (%) 35.4 35.9 37.4 37.0
EBITDA 1,695 1,961 2,288 2,417
YoY gr. (%) 14.1 15.7 16.7 5.6
Margin (%) 16.1 17.0 18.1 18.4
Depreciation / Depletion 452 260 270 239
EBIT 1,243 1,701 2,018 2,178
Margin (%) 11.8 14.8 15.9 16.5
Net Interest 8 4 4 6
Other Income 755 982 550 359
Profit before Tax 1,990 2,679 2,564 2,531
Margin (%) 18.9 23.3 20.3 19.2
Total Tax 344 698 646 670
Effective tax rate (%) 17.3 26.1 25.2 26.5
Profit after Tax 1,646 1,981 1,918 1,861
Minority interest - - - -
Share Prof it f rom Associates - - - -
Adjusted PAT 1,646 1,981 1,918 1,861
YoY gr. (%) 70.6 102.1 55.9 47.1
Margin (%) 15.6 17.2 15.1 14.1
Extra Ord. Income / (Exp) (55) - - -

Reported PAT 1,591 1,981 1,918 1,861

YoY gr. (%) 64.9 102.1 55.9 47.1
Margin (%) 15.1 17.2 15.1 14.1
Other Comprehensiv e Income - - - -
Total Comprehensive Income 1,591 1,981 1,918 1,861
Av g. Shares O/s (m) 105 105 105 106

EPS (Rs) 15.6 18.8 18.2 17.6

Source: Company Data, PL Research

January 17, 2019 7

 L&T Technology Services

Recommendation History

No. Date Rating TP (Rs.) Share Price (Rs.)

1 28-Aug-18 Accumulate 1,780 1,608
2 5-Oct-18 Accumulate 1,780 1,651
3 25-Oct-18 Accumulate 1,780 1,455
4 7-Jan-19 Accumulate 1,780 1,637

Analyst Coverage Universe

Sr. No. Com panyName Rating TP (Rs) Share Price (Rs)
1 Cyient BUY 810 609
2 HCL Technologies Accumulate 1,100 942
3 Hexaw are Technologies Accumulate 430 332
4 Infosys BUY 810 684
5 L&T Technology Services Accumulate 1,780 1,637
6 Mindtree BUY 1,140 841
7 Mphasis Accumulate 1,220 925
8 NIIT Technologies BUY 1,460 1,141
9 Persistent Systems Accumulate 725 570
10 Redington (India) BUY 140 86
11 Sonata Software BUY 410 296
12 Tata Consultancy Services Accumulate 2,275 1,889
13 TeamLease Services Hold 2,740 2,884
14 Tech Mahindra BUY 885 688
15 Wipro Accumulate 350 324
16 Zensar Technologies BUY 290 229

PL’s Recommendation Nomenclature (Absolute Performance)

Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly

January 17, 2019 8

 L&T Technology Services

ANALYST CERTIFICATION
(Indian Clients)
We/I, Mr. Rajat Gandhi- MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this re search report accurately
ref lect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
or v iew(s) in this report.

(US Clients)
The research analy sts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately
ref lect his or her or their personal views about all of the issuers and their securities; and No part of his or her or their compensation was, is or will be directly related to the specific
recommendation or views expressed in this research report.

DISCLAIMER
Indian Clients
Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for
third party financial products. PL is a subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various su bsidiaries engaged in business of commodity broking,
inv estment banking, financial services (margin funding) and distribution of third party financial/other products, details in respect of which are available at www.plindia.com.
This document has been prepared by the Research Division of PL and is meant for use by t he recipient only as information and is not for circulation. This document is not to be reported
or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security.
The inf ormation contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness
of the same. Neither PL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made
av ailable or expressed herein or for any omission therein.
Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or
otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.
Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions
of securities of companies referred to in this report and they may have used the research material prior to publication.
PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document.
PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014
PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities.
PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company.
PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month
immediately preceding the date of publication of the research report.
PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report.
PL or its associates might have received compensation from the subject company in the past twelve months.
PL or its associates might have managed or co-managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any
other assignment in the past twelve months.
PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
PL or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject
company in the past twelve months
PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report.
PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or
other benef its from the subject Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest
at the time of publication of this report.
It is confirmed that Mr. Rajat Gandhi- MBA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve
months
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its
or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analy sts have not engaged in market making activity
f or the subject company
Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary
to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed
herein. In rev iewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest.
PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company or (b) be engaged
in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company or act as an
adv isor or lender/borrower to the subject company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

US Clients
This research report is a product of Prabhudas Lilladher Pvt. Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s)
preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are
not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or
regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act,
1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major
Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted
onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major
Institutional Investors, Prabhudas Lilladher Pvt. Ltd. has entered into an agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").
Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

Prabhudas Lilladher Pvt. Ltd.

3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India | Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
w ww.plindia.com | Bloom berg Research Page: PRLD <GO>

January 17, 2019 9

AMNISH AGGARWAL
Digitally signed by AMNISH AGGARWAL
DN: c=IN, o=Prabhudas Lilladher Private Limited, ou=organisation, cn=AMNISH AGGARWAL,
serialNumber=7a6f13691881d5a8af6353865a61b48b7040e72f4a1bf53182e368b3ca14a5e4, postalCode=400015,
2.5.4.20=c9b37ca6a8c78a11d6c42a4b6014e984fdf135dc1449611df0dc682d08443fc6, st=Maharashtra
Date: 2019.01.17 23:04:27 +05'30'