L&T Technology Services Analysis

dividend

Pros

• Dividends paid are well covered by earnings (3.7x coverage).
• Dividends after 3 years are expected to be well covered by earnings (3.1x coverage).
• L&T Technology Services's pays a higher dividend yield than the bottom 25% of dividend payers in India (0.76%).

Cons

• Dividend payments have increased, but L&T Technology Services only paid a dividend in the past 4 years.
• L&T Technology Services has been paying a dividend for less than 10 years and during this time payments have been volatile (annual drop of over 20%).
• L&T Technology Services's dividend is below the markets top 25% of dividend payers in India (3.08%).

future

Pros

• L&T Technology Services is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).
• Performance (ROE) is expected to be above the current IN Professional Services industry average.
• L&T Technology Services's revenue growth is expected to exceed the India market average.

Cons

• Cash flow for L&T Technology Services is expected to increase but not above the 50% threshold in 2 years time.
• L&T Technology Services's earnings are expected to grow by 7.1% yearly, however this is not considered high growth (20% yearly).
• L&T Technology Services's earnings growth is positive but not above the India market average.
• L&T Technology Services's earnings growth is positive but not above the low risk savings rate of 7.2%.
• L&T Technology Services's earnings are expected to decrease over the next year.
• L&T Technology Services's earnings are expected to increase but not above the low risk growth rate in 3 years time
• L&T Technology Services's net income is expected to increase but not above the 50% threshold in 2 years time.
• A decline in L&T Technology Services's performance (ROE) is expected over the next 3 years.
• L&T Technology Services's revenue is expected to increase but not above the 50% threshold in 2 years time.
• L&T Technology Services's revenue is expected to grow by 7.3% yearly, however this is not considered high growth (20% yearly).

health

Pros

• L&T Technology Services is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
• L&T Technology Services is profitable, therefore cash runway is not a concern.
• L&T Technology Services is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (2105.9%, greater than 20% of total debt).
• Debt is covered by short term assets, assets are 96x debt.
• L&T Technology Services's cash and other short term assets cover its long term commitments.
• The level of debt compared to net worth has been reduced over the past 5 years (14.7% vs 1.1% today).
• Interest payments on debt are well covered by earnings (EBIT is 309.2x coverage).
• L&T Technology Services's level of debt (1.1%) compared to net worth is satisfactory (less than 40%).
• Low level of unsold assets.

Cons

management

Pros

• The tenure for the L&T Technology Services board of directors is about average.
• Keshab's compensation has been consistent with company performance over the past year, both up more than 20%.

Cons

• Keshab's remuneration is higher than average for companies of similar size in India.
• L&T Technology Services individual insiders have only sold shares in the past 3 months.
• The average tenure for the L&T Technology Services management team is less than 2 years, this suggests a new team.

past

Pros

• L&T Technology Services has delivered over 20% year on year earnings growth in the past 5 years.
• L&T Technology Services used its assets more efficiently than the IN Professional Services industry average last year based on Return on Assets.
• L&T Technology Services has efficiently used shareholders’ funds last year (Return on Equity greater than 20%).
• L&T Technology Services's earnings growth has exceeded the IN Professional Services industry average in the past year (6.9% vs 4.9%).

Cons

• L&T Technology Services's 1-year earnings growth is less than its 5-year average (6.9% vs 24.9%)
• L&T Technology Services's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).

value

Pros

• 540115 outperformed the Professional Services industry which returned -30.2% over the past year.
• BSE:540115 is up 22.7% outperforming the Professional Services industry which returned 20.3% over the past month.
• BSE:540115 is up 22.7% outperforming the market in India which returned 8% over the past month.

Cons

• L&T Technology Services's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).
• L&T Technology Services's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).
• L&T Technology Services is overvalued based on assets compared to the IN Professional Services industry average.
• L&T Technology Services is poor value based on expected growth next year.
• L&T Technology Services is overvalued based on earnings compared to the IN Professional Services industry average.
• L&T Technology Services is overvalued based on earnings compared to the India market.
• 540115 underperformed the Market in India which returned -14.5% over the past year.