L&T Technology Q4 Results Review - Organic Guidance Commentary Positive But Is Broadly Built-In: Dolat Capital

Dolat Capital Report

L&T Technology Services Ltd. reported a strong revenue growth of 2.8% QoQ in constant currency terms (our estimate: 1.0%), where growth was led by medical devices (7.7%) and plant and engineering vertical (6.2%). Key vertical transportation declined 1.3% (on strong base). Guided 20% plus growth overall and 10% plus organic basis for FY24.

Operating profit margin was flat at 18.7% (our estimate: 18.6%) as it was able to absorb higher employee costs via operational efficiency/ lower general and administative. Improved OPM outlook for FY24 to 17% (~30 bps versus earlier implied OPM).

Announced dividend per share of Rs 30. 

L&T Tech won a deal of $40 million plus (U.S Transportation major) and three deals of $10 million plus (from industrial, telco and auto original equipment manufacturer). For Smart World and Communication business, L&T Tech won three deals globally in next gen communications, transportation and industrial products. 

While organic growth guidance provides visibility, margin and profitability improvement is expected to be sluggish due to SWC acquisition, and present estimates well built into valuation.

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