L&T Technology Services Share Q3 Results

5paisa Research Team

Last Updated: 12th December 2022 - 07:38 pm

Larsen & Toubro Technology Services (LTTS) reported stable numbers but markets were overall disappointed with the fact that despite the higher EBIT margins, the overall margins at 18.6% is quite low compared to the peer group.

Financials of Larsen & Toubro Technology Services

Rs in Crore	Dec-21	Dec-20	YOY	Sep-21	QOQ
Total Income (Rs cr)	₹ 1,687.50	₹ 1,400.70	20.48%	₹ 1,607.70	4.96%
Net Profit (Rs cr)	₹ 248.80	₹ 186.10	33.69%	₹ 230.00	8.17%
Diluted EPS (Rs)	₹ 23.56	₹ 17.63		₹ 21.77
Net Margins	14.74%	13.29%		14.31%

Let us focus on the top line first. L&T Technology Services Ltd reported 20.48% growth in sales for the Dec-21 quarter at Rs.1,688 crore. LTTS operates in the pure play engineering services segment and is a key player in this space.

LTTS is betting in a big way on EACV (electric autonomous and connected vehicles) to become the growth vehicle of future. The company declared a dividend of Rs.10 per share to equity shareholders.

Net profits for the Dec-21 quarter was up 33.7% at Rs.249 crore due to EBIT margins expanding by 340 basis points to 18.6%. Digital revenues constituted 56% of revenues while the EACV and the Medtech verticals showed best traction in top line and bottom line growth LTTS secured $45 million deal plus 3 deals with TCV (total contract value) above $10 million. PAT margins rose 145 bps to 14.74% in Dec-21 quarter.

How did the LTTS stock perform on 19th January?

On 19th January, the stock of LTTS closed 6.3% lower at Rs.5,079.85 on the BSE. The stock, during the day, touched a high of Rs.5,151.50 and a low of Rs.4,980.05 in the day, before bouncing at close. In the last on year, the stock has more than doubled from a low of Rs.2,301.

LTTS has a market cap of Rs.53,585 crore. But, why the stock has fallen so sharply on a day when the results on the previous day were not exactly bad.

There are two reasons for the fall. Firstly, the market has been seeing underlying weakness for the last 2 days on account of rising oil prices and bond yields in the US and Indian markets. That has sort of weakened sentiments around the stocks.

LTTS was also hit by this macro impact of stocks weakening overall. However, there is also a stock specific reason why the stock price disappointed on 19-January.

Most analysts were pencilling in 5% growth in revenues on a sequential basis. However, the revenue growth came in at just about 4.3%, which did leave the markets disappointed. In addition, the industrial products division and the Medtech division also showed seasonal weakness.

The third quarter has been traditionally weak for Indian IT companies but it was the macro weakness and the sales slowdown that pulled the stock of LTTS lower.