Target: ₹₹5,251

CMP: ₹4,862.90

L&T Technology Services (LTTS), a prominent ER&D player with a global footprint across key verticals — Mobility, Sustainability, and Technology — and flexes a robust portfolio of niche subsegments and service lines. Distinguished among its peers, LTTS has cemented its position in the engineering domain through the development of cutting-edge capabilities (1,448 patents), leveraging both organic/inorganic growth through strategic acquisitions (such as Intelli-swift and SWC).

The management is confident in its expansive capabilities & aims to achieve a $2 billion revenue run rate in the medium term, with a long-term target of $1 billionn each vertical. This ambition is underpinned by a rich client base (378 active clients) with a consistent track record of securing large deals (7-8 in last 6 quarters).

Given the rising demand in the ERD space, LTTS is well-poised with its technological prowess and capacity to capture the growth and is likely to lead the pack. However, macro-economic challenges may pose short-term headwinds, potentially dampening growth in the near term.

We initiate the coverage with Buy rating at a target price of ₹5,251 (32x PE FY27E EPS).

Key risks: Acquisitions may impact financials; large deals not ramping up as expected; technology disruption; and talent acquisition and retention