L&T Technology Services posts robust numbers for March quarter; stock upbeat

Shares of L&T Technology Services jumped as much as 6.8 per cent on the BSE in early morning deals on April 27 after the firm, on Wednesday, reported 19 per cent growth in its revenue and 18 per cent growth in net profit during the quarter ending March 31.

At the time of writing this report, the stock traded over 5 per cent higher at Rs 3,624 on the BSE as against a 0.15 per cent rise in the benchmark index, Sensex at 60,415.88 points.

During the March quarter, L&T Technology Services won a $40 million deal and three $10 million plus TCV deals.

The IT company’s revenue stood at $990 million, which was a growth of 16 per cent in constant currency terms. EBIT margin was at 18.5 per cent, a record high for L&T Technology Services. The company’s net profit grew 22 per cent and stood at Rs 1,69.8 crore. L&T Technology also announced a dividend of Rs 30 per share recommended by its Board.

The sequential revenue growth was led by the Medical Devices vertical was up 7.2 per cent quarter-on-quarter (QoQ), Plant Engineering was up 5.8 per cent QoQ; whereas Transportation was down 1.1 per cent QoQ.

Headcount addition grew by 584 QoQ as compared to 175 in Q3FY23 to 22,233 employees. L&T Tech's attrition decreased by 110 basis points(bps) QoQ to 22.2 per cent. 

What do analysts suggest on L&T Technology Services?

Zee Business panellist Rakesh Bansal notes that technically there is a gap up opening and a breakout, adding that from an expiry perspective, the stock could be a short-covering candidate.

Bansal has recommended holding the shares of L&T Technology Services and has suggested ‘buy on correction’ for a target price of Rs 3,650/3,670 apiece.

"In recent times the said counter has already moved on 12 per cent from its lower levels of Rs 3,300 to Rs 3,700 levels. At the current juncture, it has reached near its major hurdle of Rs 3,725 to Rs 3750 levels. So one needs to wait for daily closing above Rs 3,750 for the further upside till Rs 3,900 in the near term. On the flip side, if profit booking comes then Rs 3,600 will act as support," said Jigar S Patel - Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers

The brokerage firm, Yes Securities has maintained a 'Neutral' rating on shares of L&T Tech for a target price of Rs 3,678 apiece. 

According to Yes Securities, going ahead employee attrition is expected to come down with rising offshore mix, and improving employee pyramid will support the operating margin.

L&T Technology's share price history

On a year-to-date (YTD) basis, the shares of L&T Technology have declined over 2 per cent. The benchmark Nifty50 has also dipped by over 2 per cent during the period. In the past six months, the stock has risen over 3 per cent, as compared to the headline index’s rise of 0.50 per cent.

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