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HDFC Securities Institutional Equities
The brokerage firm HDFC Securities Institutional Equities has maintained Add rating on L&T Technology Services Ltd. with a trimmed target price of Rs 3,350, based on 20 times June 2028E earnings per share.
The brokerage projects USD revenue growth of 2.2/10.3/11.5% and Ebit margins at 15.4/16.0/16.1% for FY27/FY28/FY29E, driving an EPS CAGR of ~14% over FY26–29E. At the current market price, L&T Tech trades at 22x FY27E EPS, reflecting a ~20% discount to its 10-year average.
According to the brokerage, L&T Tech has built a strong leadership position in AI-led engineering services, supported by over 250 AI patent filings, which is an estimated six-to-nine-month lead over peers. The company currently has ~30 clients in the AI intelligence framework and has significantly accelerated investments in AI, particularly in CY24, with over 151 patent filings alongside continued investments in solution development.
The brokerage also highlighted that L&T Tech is currently taking customers at level 3 of the engineering framework (Intelligence level) and sees a substantial opportunity driven by the increasing intelligence of products and the shift toward autonomous manufacturing.
This trend is translating into rising client interest towards AI-led transformation and business-centric use cases driving better time to market. The R&D spend is currently elevated (4-5% of revenue), although management expects this to normalize to ~2% over time as AI investments mature.
Factoring in the divestment of the SWC business, HDFC Securities have reduced its earnings estimates by ~3/8% for FY27/FY28E.
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