iifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

L&T Tech Services: Long runway for accelerated growth

21 Mar 2024 , 05:47 PM

Recommendation: Add; Target price: Rs 4000


Analysts of IIFL Securities hosted Amit Chadha (CEO & MD), Rajeev Gupta (CFO) and Pinku Pappan (Head IR & M&A) for investor meetings in US. In revenues, LTTS has crossed USD1bn and aspires to reach USD1.5bn revenue run rate by FY25. The key moat for the company includes its engineering DNA (helps capture tech trends early), diversified vertical exposure (helps in cross-pollination) and marquee client relationships. LTTS continues to benefit from structural tailwinds in its key verticals – Transportation, Plant Engineering and Industrial Products. Integration of the recently acquired Smart World and Communications (SWC) is progressing as per plan. Large deal pipeline is at an all-time high, though decision-making slower than last year. On margins, LTTS is confident of achieving 18%+ Ebit margins by H1FY26 (vs 17.2% in Q1FY24). Maintain ADD rating on the stock, as analysts of IIFL Securities believe the structural tailwinds are partly reflected in the recent re-rating that the stock has seen. 

Structural industry tailwinds intact: 

Structural tailwinds of the lack of availability of talent in the western world, increasing relevance of time to market and expansion of the definition of what’s ‘non-core’ to enterprises — will continue to drive robust growth for India’s ER&D services industry. Additionally, the shortening product life cycles are leading to ER&D spend becoming less discretionary. 

Investments in technology, client and employees to drive growth: 

LTTS is investing in technology (patents, labs, accelerators and reusable assets), clients (mining of strategic accounts and setting up of client advisory council) and employee satisfaction (re-skilling of employees). Management is confident that these investments will lead to a sustainable moat for the company, so as to drive faster growth for longer. Overall, the size and quantum of large deals in the pipeline are at an all-time high; management expects deal velocity to further improve from Jan’24. 

Multiple levers to drive margins higher: 

LTTS’ operational rigour, combined with being selective in picking deals, led to an all-time high Ebit margin of 18.5% in FY23. While Q1 margins were impacted by the consolidation of SWC and Q2 is likely to be impacted by wage hikes, management has multiple levers to take margins back to above 18% by H1FY26. Margin levers include change in SWC’s business mix, offshore pyramid rationalisation and operating leverage.

Related Tags

  • L&T Tech Services
  • LTTS
sidebar mobile


Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.