HDFC Securities has add call on L&T Technology Services Ltd. with a target price of Rs 5350. The current market price of L&T Technology Services is Rs 4930.

Time period given by analyst is one year when L&T Technology Services Ltd. price can reach defined target.

L&T Technology Services Ltd., incorporated in the year 2012, is a Mid Cap company (having a market cap of Rs 53972.50 Crore) operating in IT Software sector.

L&T Technology Services Ltd. key Products/Revenue Segments include Service (Engineering) for the year ending 31-Mar-2020.

Financials

For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 1562.60 Crore, up 5.93 % from last quarter Total Income of Rs 1475.10 Crore and up 19.43 % from last year same quarter Total Income of Rs 1308.40 Crore. Company reported net profit after tax of Rs 217.00 Crore in latest quarter.

Investment Rationale
The brokerage upgrades L&T Technology Services (LTTS) to ADD, based on robust performance in Q2 and improving growth outlook due to deal wins. The management has increased the growth guidance for FY22E to 19-20% (vs. 15- 17% earlier), citing a strong demand environment. The brokerage believes LTTS’ growth will be driven by (1) robust deal wins – five wins of TCV >USD 10mn, including two of TCV >USD 25mn; (2) impressive client base and mining capability – 57 of the top-100 ER&D spenders are LTTS clients and the deal pipeline remains strong, especially in EACV (electric), med-tech, and digital ER&D (manufacturing); and (3) leadership in industrial products and plant engineering, supported by recovery in telecom and hi-tech verticals. The margin performance will be supported by offshoring, operating leverage, and improving segmental mix; however, the ongoing hiring of freshers (to counter attrition) and the expected increase in travel and operational expenses could impact margins.

Promoter/FII Holdings
Promoters held 74.15 per cent stake in the company as of 30-Sep-2021, while FIIs owned 9.5 per cent, DIIs 6.14 per cent.