Target: ₹5,050

CMP: ₹5,245.60

L&T Technology Services reported an in-line performance for the quarter. Both revenue and EBIT margin were in line with expectation. It reported revenue of ₹2,650 crore, up 3.1 per cent q-o-q in INR terms and up 1.7 per cent in USD terms.

Segment-wise, tech grew by 9.8 per cent, sustainability by 3.1 per cent and Mobility declined by 7.1 per cent. EBIT margin improved by 83bps to 15.9 per cent, led by lower SG&A (down 5 per cent).

Deal booking remained strong during the quarter. LTTS booked one $50 million, two US$35 million, two $25 million and three $10 million TCV deals. The no. of active clients increased to 378, up 5 per cent. Headcount decreased by 233 q-o-q to 23,465 employees while attrition was up by 10bps to 14.4 per cent.

It has reaffirmed the medium-term plan of $2 billion revenue and EBIT margin of 17-18 per cent. The near-term demand environment remains challenging, especially in Mobility/Auto as OEMs continue to postpone major investments. We roll over to FY27 for valuation and maintain our Reduce rating with a revised target price (TP) of ₹5,050 (vs ₹5,115 earlier) at a PE of 28x on FY27E EPS.

We have reduced target PE multiple from 29x to 28x to account for weak outlook in Automotive segment.