L&T Technology Services recently reported its quarterly performance, which was in line with expectations. The company’s revenue and EBIT margin both met forecasts, with revenue reaching ₹2,650 crore, a 3.1% increase quarter-on-quarter in INR terms and a 1.7% increase in USD terms.
Despite overall growth, the company experienced a decline in its Mobility segment, while its tech and sustainability segments showed positive growth. The company’s EBIT margin improved by 83 basis points to 15.9%, mainly due to lower SG&A expenses.
Deal bookings remained strong for L&T Technology Services during the quarter, with several significant deals being secured. The company also saw an increase in the number of active clients and reaffirmed its medium-term revenue goal of $2 billion and an EBIT margin of 17-18%.
However, the near-term demand environment appears challenging, particularly in the Mobility/Auto segment, where OEMs are delaying major investments. As a result, the company’s outlook in the automotive segment is weak, prompting a reduction in the target PE multiple from 29x to 28x.
In light of these factors, analysts maintain a “Reduce” rating for L&T Technology Services and set a revised target price of ₹5,050, down from ₹5,115 earlier. This target price is based on a PE of 28x on FY27E EPS.
Overall, while L&T Technology Services has shown resilience in its performance, challenges in the automotive segment and the broader demand environment are cause for caution. Investors should closely monitor the company’s future performance and strategic decisions in response to market conditions.
