Hold LT Technology Services; target of Rs 3390: Prabhudas Lilladher

Moneycontrol • 11 days ago

Original source

Key Investment Pillars

  • Revenue growth: LTTS reported a 2.7% QoQ CC revenue growth, driven by Sustainability and Mobility segments, with a strong deal pipeline and growing traction in AI-led engineering services.
  • Margin expansion: EBIT margin expanded 60bps QoQ to 16.3%, driven by operational efficiencies and a healthy segment mix, with a mid-16% margin aspiration.
  • AI-led growth: AI-related revenues reached USD 120mn, with over 50% of Q2 large deals being AI-related, and a growing ecosystem of academia and industry partnerships expanding TAM.
  • Geographic diversification: North America, India, and Europe grew by 2.8%, 3.9%, and 0.6% QoQ, respectively, with a declining onsite mix.

Thesis Validation Checklist

To validate the investment thesis, watch for:

  • Revenue growth momentum: Sustained revenue growth across segments, particularly in Sustainability and Mobility.
  • Margin stability: Maintenance of EBIT margins in the mid-16% range, despite expected wage hikes.
  • AI-led deal wins: Continued strong AI-related deal wins and growing traction in AI-led engineering services.
  • Geographic diversification: Further growth in North America, India, and Europe, with a declining onsite mix.