Shares of L&T Technology Services (LTTS) surged over 4% on February 21 after global brokerage Macquarie upgraded its rating from ‘Underperform’ to ‘Outperform’, raising the target price to ₹6,530 per share. The brokerage firm cited valuation discounts and stronger-than-expected growth catalysts as key factors behind the upgrade. While Macquarie still expects below-peer growth, it acknowledged that LTTS is now trading at an 11% discount to Coforge and a 30% discount to Persistent Systems based on FY26E Price-to-Earnings (PE) ratio. The potential for faster growth, particularly after the acquisition of Intelliswift, is expected to act as a significant catalyst.
Another key factor highlighted by Macquarie is the recovery in EBIT margins, which is expected to move towards the 16-17% target range, compared to 15.5% estimated for FY25. This margin expansion, coupled with accelerated revenue growth, has positioned LTTS as a value play in the engineering and technology services sector.
L&T Technology Services, the engineering, research, and development (E&RD) subsidiary of the L&T Group, has set an ambitious target of $3 billion in revenue in the short-to-medium term. The company is focusing on expanding its mobility, sustainability, and technology divisions, with each expected to scale up to $1 billion in revenue within this timeframe. According to CEO and Managing Director Amit Chadha, the company’s long-term vision is to become a $5 billion firm, making it the largest E&RD company globally, up from its current third position.
LTTS has been aggressively pursuing large deal wins to drive growth. The company recently closed an $80 million-plus deal this quarter, following $50 million worth of deals in the previous quarter. The past quarter marked the highest deal wins in LTTS’s history, and management remains optimistic about sustaining this momentum. Chadha stated to Business Standard that CY25 is expected to be a better year than CY24, with a strong pipeline of deals and improving demand trends in the E&RD sector.
With strong execution, robust deal wins, and a clear roadmap for scaling operations, Macquarie sees LTTS as a compelling investment at current levels.
