L&T Tech Shares Climb 6% Post Q4 Results. What Should Investors Do?

Synopsis

L&T Technology Services saw its shares rise nearly 6% following its report of a 22% rise in net profit at INR 1,170 crore for Q1 2023. Its revenue from operations also experienced a growth of 22% YoY. The company reported a 16% growth in constant currency (cc) terms, with EBIT margins at 18.5%. HDFC Securities maintained its Add rating on L&T Technology with a target price of INR 3,585 while YES Securities maintained its reduce rating with a target price of INR 3,678. Choice Broking downgraded its rating on the stock to Add with a target price of INR 3,738.

L&T Tech shares climb 6% post Q4 results. What should investors do?

Shares of IT services company L&T Technology Services rallied nearly 6% to Rs 3,643 in Thursday’s trade on BSE after the firm reported a 22% growth in its net profit at Rs 1,170 crore for the quarter ended March 2023.

Its revenue from operations during the quarter came in at Rs 8,014 crore for the same period, registering a growth of 22% year-on-year.

The revenue grew 16% in constant currency (cc) terms, while dollar revenue stood at $990 million. EBIT margins during the reporting period were at a record high of 18.5%.

At 10.24 am, the stock was trading 5.2% higher at Rs 3,626 on BSE. On a year-to-date basis, the stock has declined 3%, while it has fallen over 10% in the past one year.

Should you buy, sell or hold L&T Technology Services’ stock? Here’s what analysts say:

YES Securities

YES Securities maintained its reduce rating on L&T Technology Services with a target price of Rs 3,678.

“L&T Technology Services reported inline financial performance for the quarter. Both, the sequential revenue growth and EBIT margin came in as per expectation. We estimate a revenue CAGR of 18.0% over FY23-25E with an average EBIT margin of 17.5%. We roll over to FY25E estimates and maintain our ‘Neutral’ rating on the stock with a revised target price of Rs 3,678/share at 25x on FY25E EPS,” it said.

HDFC Securities

HDFC Securities maintained its Add rating on L&T Technology with a target price of Rs 3,585.

“We have built low-teens organic revenue CAGR over FY23-25E, which is higher than its historical 12% CAGR (~300bps above tier-1 IT), supported by a strong and diversified engineering services pedigree. Near-term upside potential is limited. Maintain Add, with a TP of Rs 3,585 based on 25x Dec-24E EPS (in-line with average multiple) and supported by 17% EPS CAGR over FY23-25E,” it said.

Choice Broking

Choice Broking downgraded its rating to ‘Add’ on L&T Technology Services with a target price of Rs 3,738 (Earlier: Rs 4,400).

“The management’s commentary demonstrates its confidence in a strong demand environment. It foresees a robust deal pipeline in the US, Europe and the Middle East, driving growth going forward, and has re-affirmed its target revenue run rate of $1.5 Bn by FY25,” it said.

“We expect LTTS to achieve their target with a slightly deteriorating margin profile. Hence, we have modified our estimates and arrived at a DCF-based target price of Rs.3,738 (from Rs 4,400 earlier), implying a 28x multiple on FY25E EPS of Rs.134, and downgrade our rating to Add,” it added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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