LTTS share tumbles 7% post soft Q4; is it time to sell stock?

Shares of L&T Technology Services Ltd (LTTS) tumbled 7 per cent in Friday's trade after the IT firm reported 8.8 per cent drop in net profit at Rs 311.10 crore despite 17.5 per cent YoY rise in sales at Rs 2,982.40 crore. Analysts said the Trump tariff-related concerns are weighing more on capex-intensive segments, which in turn is impacting ER&D vendors such as LTTS. They are mostly 'neutral' on the stock.

LTTS shares fell 7 per cent to hit a low of Rs 4,165.90 today. MOFSL said LTTS missed its guidance on revenue on macro headwinds. The Q4 performance came in below expectations despite record large deal total contract value (TCV) wins, as macro pressures led to ramp-up delays and deferment of deal signings. Some engagements were also executed on an investment basis to support strategic clients, impacting organic revenue realization, MOFSL said.

The IT firm witnessed a contraction in EBIT margin to 13.2 per cent in 4Q, dragged by the full-quarter impact of Intelliswift (150 bps), revenue deferrals in high-margin segments, and one-off client support investments. 

"While management reiterated its 16 per cent margin aspiration by Q4FY27–Q1FY28, the miss raises concerns. A clear margin trajectory reversal is critical for any sustained re-rating," MOFSL said while suggesting a target of Rs 4,400 on the stock.

LTTS said its large deal wins stood at $210 million against $200 million in Q3, driven by customer engagements focused on both the development of new-age products and platforms, as well as business transformation initiatives. Its management aspires for EBIT margin at mid-16 per cent levels by 4QFY27 to 1QFY28. 

The IT major announced a final dividend of Rs 38 per share, with its dividend pay-out ratio coming in at 46 per cent for the year and return on equity (ROE)ay 22 per cent for the year. 

Nuvama said Q4FY25 revenue growth and margins disappointed due to a pullback in spends by clients amid macro headwinds. The recent tariff-related uncertainty is weighing on capex-intensive segments, which in turn is hurting ER&D vendors such as LTTS, it said.

"We are cutting FY26E/27E EPS by -5%/-0.5% as we lower our growth and margins expectations, primarily for FY26. We continue to value LTTS at 25x FY27E PE with a target of Rs 4,300 (earlier Rs 4,320); maintain ‘HOLD’," Nuvama said.

Post the results, Antique Stock Broking reduced its FY26 and FY27 EPS estimates by 6 per cent each due to a miss on both revenue and margin. 

"We continue to maintain HOLD recommendation with a target of Rs 4,850 (earlier Rs 5,480), as we cut our forward PE multiple to 30 times (from 32 times) on FY27E EPS," Antique said.