L&T Tech Q4 result review: Stock tanks 9.5% as brokerages remain cautious, cut estimates

L&T Technology Services (LTTS) reported a modest 0.2 percent year-on-year increase in net profit, reaching ₹340 crore, due to slower revenue growth and a reduction in margins. Its revenue grew by 5 percent year-on-year to ₹2,537.5 crore. The management expects a “slightly muted” performance in the near term as the company invests in critical areas for future growth.

For the quarter under review, the operating profit margin came in at 16.9 percent, compared to 17.9 percent in the year-ago period and 17.2 percent in the previous quarter.

The engineering services company’s net profit for fiscal year 2024 grew by 7.6 percent to ₹1,303.7 crore. LTTS Managing Director and Chief Executive Amit Chadha mentioned that the company’s operating profit margin may be compressed due to investments, despite reporting margins of 17-18 percent in the past. The organization has also undergone a restructuring, reducing the number of business verticals from five to three.

In terms of stock price trends, LTTS did not fare well with its Q4 results, leading to a 9.5 percent decline in stock price. The stock is currently over 20 percent away from its peak and down 9 percent year-to-date.

Following the Q4 results, several brokerages remained cautious on the stock and revised their earnings estimates for LTTS. Morgan Stanley issued an “underweight” rating, Antique Broking downgraded the stock to “hold,” Emkay retained a ‘reduce’ rating, and Nuvama maintained a “hold” rating. Each brokerage provided target prices and insights based on the company’s performance.

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