L&T Tech Shares Jump 3% on Strong Earnings

L&T Technology Services reported FY23 revenue growth of 22%, with record margins.

Shares of L&T Technology Services Ltd rose 3%, boosted by the company’s solid earnings and revenue guidance. However, analysts remain cautious, maintaining a “sell” rating while lowering their price target on the stock. The stock was trading at Rs 3,546 on the BSE, up 2.9% from its previous close.

The engineering services company reported a 22% rise in net profit to Rs 1,174.1 crore by the end of FY23. For Q4FY23, LTTS posted a net profit of approximately Rs 310.9 crore, an increase of 18% compared to the same period last year. The company’s operating revenue rose 19.4% year-on-year to Rs 2,096.2 crore, mainly driven by transportation, plant engineering and industrial products verticals.

On a sequential basis, revenue in North America, which accounts for 60.2% of the company’s total revenue, declined 1.4%. For the full FY23, LTTS achieved $990 million in CC revenue.

In fiscal 2023, LTTS landed 18 mega-deals worth $10 million or more, down from 20 mega-deals a year ago. However, management said the total contract value (TCV) of deals, including those below $10 million, was slightly above what was achieved in FY22.

Despite some weakness in the semiconductor and hyper-scale sectors, management’s overall commentary remains solid and attractive to other sectors. Based on the broad deal pipeline and momentum, management has pegged FY24 revenue growth on an organic CC basis of 10% or higher, implying a compound quarterly growth rate (CQGR) of 2.8%. Additionally, they expect revenue growth of 20% or more, including acquisitions.

Dolat Analysis & Research maintained its ‘sell’ call with an unchanged target price of Rs 3,240 per share. Kotak maintained its “sell” rating on the stock. Motilal Oswal held its “buy” call and price target at Rs 4,040 per share.

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