Target: ₹4,774
CMP: ₹3,919.50
L&T Technology Services (LTTS) deliberate exit from low-margin and commoditised portfolios in tech, mobility and select India operations led to a 3.2 per cent q-o-q revenue decline to $326 million, but significantly enhanced profitability, with expanded EBIT margin (up by 120 bps to 14.6 per cent).
Sustainability, the company’s highest-margin segment, delivered consistent double-digit growth with margins expanding to 28.8 per cent, while mobility has bottomed out and is showing early recovery signals supported by large OEM wins and rising traction in software-defined vehicles (SDVs). Tech margins also improved meaningfully post portfolio recalibration. Large-deal TCV has remained strong at $180 million to 200 million for the fifth consecutive quarter, providing revenue visibility.
While FY26 growth guidance remains mid-single digit due to restructuring, the long-term outlook is constructive, underpinned by accelerating artificial intelligence (AI) monetisation and expanding engineering intelligence (EI) capabilities, which enhance the margin expansion (mid-16 percentage) and a superior earnings compounding beyond FY26.
The company stands at a strategic inflection toward higher quality, AI-led engineering growth in the end. At this moment, we downgrade to Hold rating with a same target price of ₹4,774 and valuing the stock at 31.9x FY27E EPS.
Published on January 16, 2026
