LTTS's $2 billion revenue target leaves brokerages split on future prospects

The deal pipeline for LTTS grew 2x YoY, but decision-making is still slow.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

L&T Technology Services' analyst day failed to prompt changes in brokerages' ratings, despite the management highlighting its new strategy, 'Go deeper to scale', for LTTS 3.0. Among the features, one of the key aspirations was recording $2 billion in revenue over the medium term.

Once the firm clocks $2 billion in revenue, the management will aim to ensure LTTS records $1 billion in revenue from each segment. Additionally, the firm wants to raise margins through higher offshoring, with an increasing fresher mix. On the short-term demand outlook, the management remains cautiously optimistic, while attempting to bag large deals and order wins.

The firm is focusing heavily on its go-to-market strategy for its three key verticals: Mobility, Sustainability, and Tech.  The firm aspires for each of these verticals to become a $1 billion business.

"Each segment currently has P&L accountability. While we are encouraged by the ambition, there is no timeline around when this could be achieved. For context, annualized revenues from Mobility, Sustainability, and Tech stand at $416 million, $354 million and $411 million, respectively," noted Motilal Oswal.

The domestic brokerage left its 'buy' rating unchanged, with a price target of Rs 6,300 per share, which indicates an upside of 15 percent from current levels.

Follow our live blog to catch all the updates

Domestic brokerage Nuvama Institutional Equities said it remains positive on the LTTS story, as it sees its strong fundamentals, impressive clientele, and capabilities across segments help it deliver strong earnings growth over the next three years.

"In the near term, however, we remain cautious on the entire ERD space, given the likely impact of slowdown/recession in the US/EU on the discretionary spend-based ERD business," said Nuvama. The brokerage kept its 'hold' rating intact, but bumped its target price up to Rs 5,200 per share, up from Rs 5,050 earlier.

The deal pipeline for LTTS grew 2x YoY, but decision-making is still slow. However, the potential start of rate cuts with resilient macros in the US may lead to a demand uptick. As a result, Emkay Global bumped up its target price on the firm to Rs 5,000 apiece but maintained its 'sell' call.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.