L&T Technology Services shares had their best day in years after results showed margins improving and large deals picking up. Strip out a one-time gain, though, and profit growth is far more modest.
Shares of L&T Technology Services rose about 15% on Wednesday, after falling 2.8% to ₹3,611.30 on Monday ahead of the results.
Revenue rose 12.1% to ₹3,040.4 crore from ₹2,713.3 crore a year earlier, and 3.4% from the previous quarter. In dollar terms, revenue was $317.1 million, up 2.7% sequentially and 4.8% from a year ago in constant currency, which strips out exchange-rate moves.
EBIT margin, the company’s key measure of operating profitability, rose to 16.3% from 14.1% a year ago and 15.7% in the previous quarter.
Reported net profit jumped 66.8% to ₹548.2 crore. But that includes a one-time gain of ₹165 crore from selling its SWC business. Without it, profit was about ₹383 crore, up roughly 17% from a year earlier, which is healthy but not spectacular.
The company also declared an interim dividend of ₹20 a share.
Deals and AI
The forward-looking numbers explain the rally. LTTS signed large deals worth more than $200 million in total contract value during the quarter. Revenue from its Engineering Intelligence solutions, which build AI into engineering and product design work, has reached an annual run-rate of $120 million.
The company said it expects revenue momentum to strengthen in the second half. It set a five-year aspiration of 13–15% annual revenue growth with EBIT margins of 16–17%. North America remains its biggest market at 60.7% of revenue.
Re-rating?
A 15% move on a quarter with low single-digit organic growth in constant currency says more about expectations than results. LTTS had been beaten down, and investors were positioned for a disappointment. Sequential growth, better margins and visible large deals were enough to flip that.
The margin recovery is real. Hitting the low end of the 16–17% range already makes the five-year target look reachable. Revenue growth is harder. Growth of about 5% in constant currency is far below 13–15%. The company needs its large deals to turn into revenue quickly in the second half to close that gap.
Engineering services companies have been seen as at risk from AI tools that automate design and testing work. A $120 million AI-led revenue line suggests LTTS can turn AI into a product
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