Target: ₹3,765
CMP: ₹3,449.10
L&T Technology Services (LTTS) reported Q4FY26 revenue of $306 million, down 1.7 per cent quarter on quarter but up 0.3 per cent year on year from continuing operations, reflecting deliberate portfolio rationalisation, including divestment of Smart World Cities (SWC), the loss-making business and exit from $19 million annualised low-margin contracts in Europe and West Asia.
EBIT margin expanded 40 bps sequentially to 15.2 per cent, marking the second consecutive quarter of margin improvement, reflecting better revenue quality and operational discipline.
The management advanced its margin aspiration, now targeting mid-16 per cent by Q4FY27 or earlier, supported by SWC exit, rupee depreciation tailwind and AI-led delivery efficiencies.
Full-year FY26 continuing operations revenue stood at $1.23 billion, growing 8.3 per cent year on year. Large-deal TCV for the year stood at $855 million, up 40 per cent. DSO improved sharply to 83 days in Q4, with the management guiding for a steady-state range of 85-90 days going forward, a significant improvement from the 110-115 days seen when SWC was included.
Under its Lakshya 2031 plan, LTTS targets a 13-15 per cent dollar revenue CAGR over five years with 16-17 per cent EBIT margins, aspiring to reach mid-16 per cent margins by Q4FY27, underpinned by six technology bets. We maintain a HOLD rating with a revised TP of ₹3,765 and valuing the stock at 23.3x FY28E EPS.