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

L&T Tech reported a humble 0.2 percent YoY summation successful nett profit, reaching ₹340 crore, owed to slower gross maturation and a simplification successful margins. Its gross grew 5 percent YoY to ₹2,537.5 crore. In presumption of margins, absorption expects a "slightly muted" show successful the adjacent word arsenic the institution invests successful captious areas for aboriginal growth.

For the 4th nether review, the operating nett borderline came astatine 16.9 percent arsenic against 17.9 percent successful the year-ago play and 17.2 percent successful the quarter-ago period.

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Meanwhile, the engineering services company's nett net for FY24 grew 7.6 percent to ₹1,303.7 crore.

LTTS Managing Director and Chief Executive Amit Chadha said the revenues successful the year-ago play were higher due to the fact that of the gains coming retired of the acquired company, Smart World. He added the institution has been reporting the operating nett borderline astatine 17-18 percent successful the past, but the level whitethorn get compressed owed to investments.

He besides announced a restructuring of the organisation, nether which it has narrowed down the fig of concern verticals to 3 from the earlier five.

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Stock terms trend

Unable to cheer the Street with its Q4 results, the banal tanked 9.5 percent to its day's debased of ₹4,689.50. It is present implicit 20 percent distant from its highest of ₹5,884.95, deed connected April 4, 2024. Meanwhile, it is inactive up 34 percent from its 52-week debased of ₹3,500, deed connected April 27, 2023.

It has gained astir 51 percent successful the past 1 twelvemonth but is down 9 percent successful 2024 YTD.

LTTS Q4 results review

Post the Q4 results, astir brokerages remained cautious connected the banal and chopped their net estimates for the IT firm.

Read here: Zensar Tech stock terms surges 12% aft steadfast Q4 result

Morgan Stanley: Morgan Stanley has issued an "underweight" standing for L&T Tech with a people terms of ₹4,200, indicating a 19 percent downside. The firm's fourth-quarter results were beneath expectations, and the guidance for weaker gross maturation was already incorporated into buy-side estimates. Given the stock's beardown show truthful acold this twelvemonth and the downward revision of EPS estimates, Morgan Stanley expects underperformance from the banal successful the adjacent future.

Antique Broking: The brokerage downgraded its standing for L&T Tech to "hold" and reduced its people terms to ₹4,500 ( 13 percent downside) from ₹5,000, citing lower-than-expected near-term guidance of a 16 percent EBIT borderline for FY25. This was beneath Antique's expectations of an 18 percent borderline for FY25/FY26. Despite a beardown exit rate, LTTS management's FY25 gross maturation projection of 8-10 percent successful changeless currency presumption was little than Antique's anticipation of 10-12 percent. Additionally, Antique anticipates decision-making delays owed to expanding geopolitical risks and continued tightening of fiscal conditions successful the US, which whitethorn lend to a softer EBIT borderline for FY25.

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Emkay: The brokerage has retained its 'reduce' standing connected the banal fixed affluent valuations, with a people terms of ₹4,750, implying an implicit 8 percent downside.

For FY25, gross maturation guidance is acceptable astatine 8-10 percent (a quarterly maturation complaint of 1.2-1.9 percent), considering delayed decision-making, geopolitical risks, and macroeconomic uncertainty. These factors, on with investments successful unit and technology, are expected to interaction margins and support them astir 16 percent. The company's aspiration for a $1.5 cardinal gross tally complaint by FY25 is contingent connected mergers and acquisitions, said Emkay. It chopped FY25E/26E EPS 9.6 percent/7.2 percent, accounting for the Q4 show and weaker borderline trajectory.

Read here: Why Bajaj Finance shares person tanked 8% contempt double-digit YoY maturation successful PAT?

Nuvama: The brokerage has maintained its "hold" standing connected the banal with a people terms of ₹4,970, indicating a 4 percent downside. The brokerage remains cautious astir the full ERD assemblage successful the abbreviated word owed to the imaginable interaction of a slowdown oregon recession successful the US and EU connected the discretionary spend-based ERD business. However, it is optimistic astir LTTS, citing its beardown fundamentals, reputable lawsuit base, and divers capabilities crossed segments arsenic factors that volition lend to robust net maturation implicit the adjacent 3 years.

Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier taking immoderate concern decision. 

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Published: 26 Apr 2024, 02:26 PM IST