Nomura has downgraded its earnings expectations for L&T Technology Services (LTTS), maintaining a ‘Reduce’ rating and trimming the target price to ₹3,600. This comes after the company reported a 4.2% quarter-on-quarter decline in constant currency revenue for Q1FY26 — higher than estimates of a 3.2% fall.
The brokerage acknowledged strong deal wins and a healthy pipeline but termed the company’s FY26 guidance of double-digit revenue growth as “ambitious.” Margins are also expected to remain under pressure in the second quarter before recovering gradually over FY26–28. Nomura has lowered its FY26–28 EPS estimates by 1–4%, noting that the stock currently trades at a rich valuation of 30x FY27 earnings.
LTTS, however, has retained its FY26 revenue guidance and reported a 10 basis point expansion in EBIT margin to 13.3%. The company’s strong performance in large deals — exceeding $200 million in TCV for the third consecutive quarter — continues to provide visibility, although near-term concerns on growth and execution persist.
