L&T Tech aims to achieve 22%, 30%, and 16% margins in mobility, sustainability, and tech respectively. Company aspires to improve offshore mix to 60% in the medium term to improve margins. Management also aspires to improve margins in 16% levels by Q4 FY27 to Q1 FY28 driven by operational efficiency, synergy benefits, higher offshore revenue mix and improved fixed price contracts.
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IDBI Capital Report
In Q4 FY25, L&T Technology Services Ltd. posted robust sequential growth, driven by Tech (+27.9% QoQ) and Sustainability (+1.9% QoQ), despite macro headwinds and sudden Q4 ramp-downs.
Tech growth was led by Smart World, software platforms, and IntelliSwift, while Sustainability faced moderation due to deal ramp-up delays, expected to recover in the coming quarter. Ebit margin stood at 13.2%, impacted by a 270bps due to integration of IntelliSwift, high share SWC growth and additional cost in supporting customer and related investments.
Order bookings surged 25% QoQ, bolstered by significant deals, including $180mn+ and $150mn+. Management remains optimistic, targeting double-digit growth for FY26, with strong momentum in SDV, Hybrid, AI, and Sustainability sectors.
Despite near-term margin pressure from tariffs and macro challenges, the company is poised for recovery, with an anticipated margin improvement to mid ~16% by Q4 FY27–Q1 FY28.
We maintain a Buy rating and a target price of Rs 5,251, valuing the stock at 32x FY27E EPS.
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