L&T Tech stock skyrockets 10% after strong Q3 earnings, record large deal bookings

L&T Tech slightly raised its FY25 revenue growth guidance.

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Shares of L&T Technology Services zoomed as much as 10 percent on January 16 as investors lapped up the stock following its healthy Q3 earnings. The information technology company reported a near 1 percent sequential rise in its net profit for the December quarter to Rs 322.40 crore.

Revenue also grew 3.1 percent to Rs 2,653 crore in the October-December period, up from Rs 2,572.9 crore in the preceding quarter. The company won eight large deals across segments, recording its highest-ever large deal bookings in Q3, with an average deal tenure of three years. which lifted its earnings growth.

At 10.13 am, shares of L&T Tech were trading at Rs 5,197.20 on the NSE, though firm in green, but off its day's high of Rs 5,336.90.

Meanwhile, CEO and Managing Director Amit Chadha also anticipates a better future for the company, going ahead.  "CY25 will be better than CY24. Our pipeline today is bigger than what it was a quarter and a year ago. We have multiple $50 million and $100 million deals that continue to build up,” he said.

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Building on that, the company marginally lifted its FY25 revenue growth guidance to 10 percent, as against the previously guided range of 8-10 percent. The upward revenue guidance now factors in a 2 percent growth benefit from the acquisition of Intelliswift. However, margin guidance has been pushed further down due to the same acquisition.

Management anticipates the FY25 margin for the organic business to be around 16 percent. However, for the combined businesses, the margin is expected to be 15 percent, reflecting a 150-basis-point impact from the Intelliswift acquisition.

While deal wins for L&T Tech this quarter have brought some positivity, Nuvama Institutional Equities notes that the margin profile continues to weaken due to acquisitions, including SWC and now Intelliswift. "Despite its strong core fundamentals, such as a robust ERD (Engineering Research and Development) franchise and a diversified revenue mix, concerns linger about the near-term growth prospects for the ERD industry as a whole," Nuvama stated.

On that account, Nuvama retained its 'hold' call on the stock but raised its price target marginally to Rs 5,150 to factor in the optimistic outlook.

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