On Monday, Citi updated its stance on L&T Technology Services Ltd. (LTTS:IN), increasing the price target to INR 4,270 from INR 4,190 while retaining a Sell rating on the stock. The adjustment comes in the wake of the company's first-quarter results, which fell short of expectations in terms of revenue and EBIT.
L&T Technology Services reported quarterly outcomes that did not meet the anticipated financial thresholds. Despite this underperformance, the company's management maintains an overall constant currency revenue growth forecast of 8-10% for the fiscal year 2025. The expected growth rate for the first quarter was approximately 3.9% at the lower end and about 5.3% at the higher end.
In addition to the revenue outlook, the company is projected to experience growth in each of the remaining three quarters of the fiscal year, according to management statements. Furthermore, the firm anticipates a margin of around 16% for FY25. In terms of workforce dynamics, the headcount saw a 1% quarter-over-quarter decrease but recorded a marginal year-over-year increase of 0.8%.
Following the latest financial disclosures, Citi has revised its earnings per share (EPS) estimates for L&T Technology Services for the fiscal years 2025 and 2026, reducing them by approximately 2-4%. The price target revision reflects this new outlook, rolling forward the valuation to March 2026 from the previous September 2025 benchmark.
Despite the revised price target, Citi's analysis suggests that the stock's valuation is steep at around 36 times the one-year forward consensus EPS. This valuation, coupled with the earnings estimate cut and the fact that Citi's FY26 EBIT estimate was already about 5% below the market consensus, underpins the firm's decision to maintain a Sell rating on LTTS shares.
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