LTTS shares: L&T Technology Services up 10% today; here are target prices

Shares of L&T Technology Services Ltd (LTTS) climbed 10 per cent in Thursday's trade as the IT firm's third quarter results came in better than expectations, with highest ever Q3 deal wins. The IT major expects the deal momentum to stay strong in 2025. LTTS shares climbed 10 per cent to hit a high of Rs 5,336.45. The stock is still down 2 per cent in the past one year.

LTTS posted dollar revenues of $312 million. The revenue growth in constant currency (CC) terms stood at 3.1 per cent sequentially and against Nomura India's estimate of 2.3 per cent. EBIT margin of 15.9 per cent -- up 80 basis points QoQ, but down 130 bps YoY, was above Nomura's estimate of 15.5 per cent. This is despite a 20 bps impact from M&A costs.

"We incorporate the recent acquisition of Intelliswift in our model and tweak our FY25-27F EPS by over 1 per cent. Our target price is unchanged at Rs 4,900 (28x FY27F EPS). The stock currently trades at 27.8 times FY27F EPS. Key upside risk is stronger-than-expected revenue growth on the back of strong deal wins and key downside risk is weaker-than-expected margin improvement over FY25-27F," it said.

For Nuvama, L&T Tech results were a mixed bag, as it had expected a revenue CC growth of 3.6 per cent QoQ. Adjusted EBIT margin though bet its estimates. PAT also came in higher than its estimate. But the brokerage upgraded its target price on the stock. "We are cutting FY25E/26E EPS by 2 per cent/5 per cent on lower other income due to acquisition. This along with a rollover to 30 times FY27 PE and updated FY26/27 USD-INR assumption to 86.5 yields a target price of Rs 5,150 (earlier Rs 5,050)," it said.

Antique Stock Broking said the LTTS management aspires for the EBIT margin to be at 16 per cent levels for FY25 for its organic business. However, the consolidation of Intelliswift business in 4QFY25 is expected to impact the EBIT margin by 150 bps, leading to it drop to the 15 per cent level.

"The company retains it FY25 revenue growth guidance of near 10 per cent in CC terms, including 2 per cent inorganic contribution, which implies a strong 6 per cent-plus organic CC growth in 4Q. We were expecting the company to cut its revenue guidance to 7-8 per cent in organic terms versus its earlier guidance of a neat 8 epr cent organic growth in CC terms," said Antique Stock Broking.

That said, the brokerage has cut its target price on the stock to Rs 5,650 from Rs 5,900, accounting for a decline in its margin assumptions.