L&T Tech Q1 Review - Results Below Expectations; Uncertainty To Impact Growth Momentum: Axis Securities

Axis Securities Report

In Q1 FY25, L&T Technology Services Ltd. reported revenue of Rs 2,462 crore, down 3% QoQ. The company reported operating profits of Rs 384 crore, posting de-growth of 10.4% on a QoQ basis.

The company’s operating margins declined by 130 bps to 15.6%, which was largely led by higher onsite expenses during the quarter. Its net profit for Q1 FY25 stood at Rs 314 crore, registering a de-growth of 8% on a QoQ basis.

Outlook

From a long-term perspective, we believe L&T Tech is well-placed for encouraging growth backed by multiple long-term contracts it has established with the world’s leading brands.

Furthermore, better revenue visibility gives us confidence in the company’s business growth moving forward. However, rising concerns over the prospects of large economies along with prevailing supply-side constraints pose uncertainties over the company’s short-term growth rates.

Valuation and recommendation

We recommend a Hold rating on the stock and assign a 30 times price/earning multiple to its FY26E earnings of Rs 165.2/share to arrive at a target price of Rs 4,900/share, implying an upside of 1% from the CMP.

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