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Shares of L&T Technology Services surged by up to 10% on January 16, following the company’s strong Q3 earnings report
L&T Rises 10% After Q3 Earnings Beats Street Estimates
L&T Share Price: Shares of L&T Technology Services surged by up to 10% on January 16, following the company’s strong Q3 earnings report. The IT firm posted a near 1% sequential increase in net profit for the December quarter, reaching Rs 322.4 crore.
Revenue for the October-December period rose by 3.1%, reaching Rs 2,653 crore, up from Rs 2,572.9 crore in the previous quarter. The company also secured eight large deals, marking its highest-ever large deal bookings in Q3, with an average deal duration of three years, which contributed to its earnings growth.
At 10:13 am, L&T Technology Services shares were trading at Rs 5,197.20 on the NSE, still in the green but off its day’s high of Rs 5,336.90.
CEO and Managing Director Amit Chadha expressed optimism about the company’s future performance, stating, “CY25 will be better than CY24. Our pipeline today is larger than it was a quarter and a year ago. We have multiple $50 million and $100 million deals in the works.”
As a result, the company slightly raised its FY25 revenue growth guidance to 10%, up from the previous range of 8-10%. This upward revision factors in a 2% growth benefit from the acquisition of Intelliswift. However, margin guidance has been lowered due to the acquisition.
Management expects FY25 margins for the organic business to be around 16%. For the combined businesses, margins are projected at 15%, reflecting a 150-basis-point impact from the Intelliswift acquisition.
While the strong deal wins have boosted investor sentiment, Nuvama Institutional Equities noted that L&T Tech’s margin profile continues to weaken due to acquisitions, including SWC and Intelliswift. “Despite strong core fundamentals, such as a robust ERD (Engineering Research and Development) franchise and a diversified revenue mix, concerns persist about the near-term growth prospects for the ERD industry as a whole,” Nuvama stated.
As a result, Nuvama maintained its ‘hold’ rating on the stock but slightly raised its price target to Rs 5,150, reflecting an optimistic outlook.
Additionally, L&T Technology Services’ board approved the allotment of 4,500 equity shares of face value Rs 2 each to grantees who exercised their vested stock options under the company’s Employee Stock Option Scheme, 2016.
Over the past year, L&T Tech shares have fallen by 12%, while the Sensex has risen by 5%.
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