The brokerage highlighted that L&T Tec delivered a clean beat, with revenue of $317.1 million and Rs 3,040 crore. Ebit margin of 16.3% rose 60 basis points QoQ and 220 bps YoY, with all segments expanding, so the mid-16% aspiration arrived two quarters early. Sustainability grew 13.4% YoY, now 38% of revenue at a 29.5% segment margin, while AI revenue reached about $120 million annualised. Large deal wins of $203 million trail the $200 mn quarterly pace, but the pipeline is up over 25% YoY and management will make up last quarter's $100 mn shortfall in H2.
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IDBI Capital Report
The brokerage firm IDBI Capital has upgraded rating of L&T Technology Services Ltd. to Buy from Hold, by valuing stock at 25.8 times FY28E earnings per share with a reduced target price of Rs 4,170, following its Q2 FY27 results.
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The brokerage highlighted that L&T Tec delivered a clean beat, with revenue of $317.1 million (+2.7% QoQ CC, +4.8% YoY CC) and Rs 3,040 crore (+12.1% YoY).
Ebit margin of 16.3% rose 60 basis points QoQ and 220 bps YoY, with all segments expanding, so the mid-16% aspiration arrived two quarters early.
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Sustainability grew 13.4% YoY, now 38% of revenue at a 29.5% segment margin, while AI revenue reached about $120 million annualised (9.5% of revenue).
Large deal wins of $203 million trail the $200 mn quarterly pace, but the pipeline is up over 25% YoY and management will make up last quarter's $100 mn shortfall in H2.
Free cash flow of 108% of net income, DSO of 78 days and an Rs 20 interim dividend add comfort.
Risks include a muted tech vertical in Q3 (MedTech ramp-down), weak European auto, Q3 wage hikes costing 50-80 bps, and 4.8% YoY CC growth that still lags the 13-15% CAGR aspiration.
L&T Tech's reported PAT includes a one-time Rs 16,500 crore gain from the Smart World divestment, so the brokerage focuses on EPS from continuing operations.
Management guarantees H2 growth above H1 while holding mid-16% margins. Systematix sees improving growth, mix-led margins and a clear AI and data-centre runway as supportive of a rerating.
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