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Motilal Oswal Report
We attended L&T Technology Services Ltd.s' analyst day, where the management spelt out its aspiration of achieving a revenue run rate of $2 billion and Ebit margin of 17-18% over the medium term. Growth drivers remain intact for key verticals across the ER&D client universe, and L&T Tech has carved out three new verticals to alter its go-to-market strategy.
The company's GTM strategy now focuses extensively on high-growth areas such as mobility (software-defined vehicles and electrification), sustainability (industrial products and plant engineering), and tech (medical devices, communications, hi-tech, smart cities).
The new strategy may not alter the growth path in the short term, but if executed correctly, it could boost long-term growth for the company, in our view.
We raise our target multiple to 40 times FY26E earnings per share, as we believe the new strategy opens up new avenues for growth, especially in hitherto weak areas such as mobility, which is growing fast across its peers.
We keep our estimates unchanged and maintain our Buy rating with a target price of Rs 6,300 (15% upside).
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