L&T Technology Shares Surge 6% on Q1 Results; Nomura Boosts Target Despite 'Neutral' Rating
Shares of L&T Technology Services (LTTS) witnessed a strong rally on Wednesday, jumping 6.13% to reach Rs 3,495. The positive movement came as the company released its first-quarter FY27 results. Separately, Nomura maintained its Neutral rating but increased its target price for the stock to Rs 3,180 from the previous Rs 3,150.Q1 Financial Performance Analysis
LTTS posted a decent performance in its first quarter of FY27. The company generated revenue of $309.9 million, reflecting a 1.5% increase quarter-on-quarter (q-q) and a 1.9% growth year-on-year (y-y) in constant currency terms.The profitability metrics showed solid operational strength. LTTS's EBIT margin stood at 15.7%, marking an improvement of 50 basis points quarter-on-quarter and 200 basis points year-on-year. The firm also achieved significant business wins, securing $100 million in deals across different size brackets, including one each in the $30 million and $20 million buckets. EPS for the quarter was reported at Rs 33.1, a rise of 17% year-on-year.
Sectoral Growth Drivers and Demand Trends
Nomura's analysis highlighted specific segments driving LTTS’s growth. The sustainability vertical led performance, growing by 4.3% q-q. The mobility vertical also showed signs of recovery, registering a 2.3% growth in the quarter.In contrast, the technology vertical saw a contraction, declining by 3.1% q-q (all figures were in dollar terms). While Nomura noted that the technology segment operated within a measured demand environment in Q1, analysts pointed out that there are large deals in this vertical currently in advanced stages of closure.
Management Outlook and AI Strategy Focus
LTTS management reiterated its ambitious Project Lakshya FY31 goals. These include delivering a revenue CAGR between 13-15% and achieving EBIT margins around the mid-16% level. The company is positioning itself strategically in next-generation technologies.Management emphasized that early investments in AI have provided LTTS with a competitive advantage. They believe this focused investment gives the team at least a 6 to 9 months lead compared to competitors in Engineering Intelligence (EI), anticipating significant market share gains as a result.
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