L&T Tech Services shares are in focus as the company’s Q3 net profit declined. Additionally, the company has restructured its business to focus on profitability, prioritising this over growth. Several brokerage houses cut ratings and target price on the stock and predict as much as 8% downside from current levels.
Nomura on L&T Tech Services
Nomura has cut its target price on L&T Tech Services to Rs 3,900 from Rs 4,100, while maintaining its ‘Reduce’ rating on the stock. The new target price implies a downside of 8.1% from the current market price.
The brokerage house also lowered its FY26-FY28 revenue growth assumptions by 340-750 basis points and expects a 5-5.5% growth in FY26-27.
LTTS posted a revenue of $326 million (-2.8% sequentially, +3.9% YoY in constant currency terms vs Nomura’s estimate of +3% QoQ in cc). The sharp miss is largely attributable to the restructuring and L&T Tech Services’ exit from certain low-margin businesses. In verticals, tech recorded a 10% QoQ decline while auto posted a 0.4% QoQ growth in dollar terms. Provisions for labour code changes in India led to a one-off provision of Rs 26.5 crore (net of tax).
LTTS management noted that it is exiting certain low-margin businesses in Israel, the US, and
Europe, with its intention of focusing on higher-margin and fast-growing new tech spend areas.
The restructuring spans across mobility and tech verticals (including parts of the SWC acquisition done three years ago). The company intends to complete the restructuring by the end of Q4 FY26 and has lowered its guidance from “double-digit” earlier to “mid-single digit” now.
Motilal Oswal on L&T Tech Services
The domestic broker Motilal Oswal, in a research note, said that it has cut FY26-28 estimates by 3.5% to factor in the guidance revision, weaker exit, and portfolio rationalisation. The brokerage house maintained its ‘Neutral’ rating with a target price of Rs 4,500, implying an upside of 6%.
The company’s EBIT margins are expected to improve to 15.2% by FY28. Organic revenue is likely to fall in FY26 (-0.8% YoY CC) due to portfolio exits, regional rationalisation under the five-year Lakshya plan, and a weak FY26 exit. Sustainability remains steady, while Mobility shows early signs of bottoming out.
Further, Motilal Oswal said that ramp-ups are likely to remain gradual, with some recent wins yet to scale up meaningfully. We believe the Tech segment remains choppy due to deliberate exits from low-margin work and a slower recovery in certain sub-segments.
Nuvama on L&T Tech Services
Post the quarterly results, Nuvama Institutional Equities maintained its ‘Hold’ rating and target price of Rs 4,200, which implies a downside of 2.7%. L&T Tech Services has announced a restructuring exercise, discontinuing certain non-strategic and less profitable businesses, leading to revenue loss, but margin gain.
“We like this bold step, which might impact the near-term financials adversely, but shall prepare the company and improve its overall business profile for the future,” said Nuvama. The brokerage firm trimmed FY26 and FY27 EPS estimates by -4.3% and -5.6%, respectively, on lower growth.
However, the analysts at Nuvama still await a bit more clarity and can turn buyers going forward. The brokerage said that it has long maintained that LTTS was sacrificing profitability for growth (SWC, Intelliswift acquisitions). But with this step, management finally seems to be focusing on profitability by making a bold and tough choice.
“We continue to like LTTS’s core fundamentals (strong ERD franchise, diversified revenue mix). We await more clarity on the impact of restructuring in Q4 and on the overall business, before turning buyers,” said Nuvama.
L&T Tech Services Q3 FY26 results
L&T Tech Services reported a consolidated net profit of Rs 302.6 crore in the third quarter of the current financial year, a drop of 6% YoY, compared to Rs 322.4 crore recorded in the same period a year ago. On a sequential basis, profit fell 7.9% from Rs 328.7 crore. The decline in net profit could be attributed to the provision of Rs 35.4 crore made for the implementation of new labour codes.
L&T Tech Services’ revenue from operations jumped 10.2% YoY to Rs 2,923.5 crore from Rs 2,653 crore in Q3 FY25. Sequentially, it decreased marginally by 1.8% from Rs 2,979.5 crore.
L&T Tech Services share performance
The share price of L&T Technology Services has fallen 3.4% in the previous five trading days. The stock has declined 7.6% in the past one month and 2.5% in the last six months. L&T Tech Services has erased over 19% of investors’ wealth in the last 12 months.