'Reduce' L&T Tech Shares Maintains Dolat Capital Post Q1 Results — Check Target Price

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Dolat Capital Report

L&T Technology Services Ltd.’s long-term growth story remains intact, with strong engineering capabilities and a superior margin profile.

We believe that growth and profitability are well built into present valuations; however, risks of macro uncertainty persist.

Consequently, we retain rating to ‘Reduce’ with a revised target price of Rs 4,600 at 30x PER (FY27E earnings per share of 153).

L&T Tech reported rev of $335 million down 4.2% QoQ in constant currency (our estimate: -0.5%); miss was on account of Smart World seasonality and slower rampup of deals (automotive, etc.). Operating profit margin up by 10 bps QoQ to 13.3% (our estimate: 13.8%) as profitability gains in the sustainability vertical got offset by weakness in Mobility & Hi-Tech.

The company has retained its FY26 CC Rev growth guidance of double digits, reaffirming its optimism that FY26 will surpass FY25, as H2 will drive much higher growth than H1. Additionally, OPM might move on an upward trajectory targeting to reach the mid-16% levels between Q4 of FY27 and Q1 of FY28 set.

L&T Tech expects continued progress in deal wins for FY26 following three consecutive quarters of $200 million+ large deal TCV bookings (including Q1), but slower translation of same in revenues and adverse revenue mix has led to curtailing of earnings estimates by 4%/4.5% for FY26/FY27E factoring in for a soft start to the Fiscal.

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