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Dolat Capital Report
L&T Technology Services Ltd. reported a strong revenue growth of 2.8% QoQ in constant currency terms (our estimate: 1.0%), where growth was led by medical devices (7.7%) and plant and engineering vertical (6.2%). Key vertical transportation declined 1.3% (on strong base). Guided 20% plus growth overall and 10% plus organic basis for FY24.
Operating profit margin was flat at 18.7% (our estimate: 18.6%) as it was able to absorb higher employee costs via operational efficiency/ lower general and administative. Improved OPM outlook for FY24 to 17% (~30 bps versus earlier implied OPM).
Announced dividend per share of Rs 30.
L&T Tech won a deal of $40 million plus (U.S Transportation major) and three deals of $10 million plus (from industrial, telco and auto original equipment manufacturer). For Smart World and Communication business, L&T Tech won three deals globally in next gen communications, transportation and industrial products.
While organic growth guidance provides visibility, margin and profitability improvement is expected to be sluggish due to SWC acquisition, and present estimates well built into valuation.
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