Brokerages retained a cautious stance on L&T Technology Services Ltd. (LTTS) after its June-quarter FY27 earnings, with Nomura marginally raising its target price following a better-than-expected performance, while Kotak Securities, JPMorgan and Nuvama lowered their price targets amid demand uncertainties and forex-related headwinds.
Analysts broadly agreed that the engineering services company delivered a decent quarter, supported by revenue growth, margin expansion and an optimistic management outlook.
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However, most brokerages remained watchful of the pace of recovery in the engineering research and development (ERD) industry, weak demand in certain verticals and the impact of forex losses.
Here's what brokerages said after the results:
Nomura
- Maintained Neutral and increased the target price to Rs 3,180 from Rs 3,150.
- Said LTTS delivered a "decent performance", with revenue and EBIT margins ahead of estimates.
- Highlighted that growth was led by the sustainability vertical, while the mobility segment showed signs of recovery despite a challenging macro environment.
- Noted the technology vertical remained soft, although large deals are in advanced stages of closure.
- Said management reiterated its Project Lakshya FY31 goals, banking on AI capabilities and Engineering Intelligence to drive market-share gains.
- Marginally revised FY27-FY28 EPS estimates by around 1-2%.
JPMorgan
- Maintained Neutral and lowered the target price to Rs 3,300 from Rs 3,400.
- Said the June-quarter performance beat estimates on both revenue and margins.
- Noted that large-deal total contract value (TCV) remained weak.
- Said management provided an optimistic outlook for the remainder of FY27.
- Cut earnings estimates by 2-7%, primarily due to forex losses.
- Said it would wait for positive proof points of the company's new strategy.
Nuvama
- Retained Hold and cut the target price to Rs 3,500 from Rs 4,000.
- Said the company started FY27 with decent performance and an optimistic outlook following the divestment.
- Believes the ERD industry will take more time to recover from the current weak macro environment.
- Flagged continued headwinds in specific sectors, including automobiles.
- Maintained FY27 and FY28 EPS estimates with less than 1% change.
Kotak Securities
- Maintained Reduce and cut the target price to Rs 3,350 from Rs 3,450.
- Said the company delivered a decent performance amid demand uncertainties.
- Expects sequential revenue growth and margin expansion through FY27.
- Factored in higher forex losses due to long-term hedges.
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