L&T Technology services share price rises over 3% despite soft Q3 results; should you buy, sell or hold?

L&T Technology services share price rose 3.5% on Wednesday's trading session despite L&T Tech's soft Q3FY24 numbers. The company missed the Street's estimates and in spite of soft Q3, management kept the FY24 growth guidance of 17.5–18.5%— hinting to a robust Q4 (part SWC seasonality), as per brokerage report.

L&T Technology Services share price today opened at 5,325.05 and touched an intraday high of 5,535.60 and an intraday low of 5,325.05 apiece on . In response to enhanced revenue visibility, brokerage Nuvama increased FY24E/25E/26E by 0.2%/1.5%/3.1% and upped its target multiple to 35x FY26E PE (from 30x).

The company also upgraded the stock to 'BUY' with a target price of 6,260 (previously 5,200). According to Rajesh Bhosale, Equity Technical and Derivative Analyst, , after two days of profit booking, L&T Tech stock prices have started on a positive note. This upmove in today's session is supported by a good, above average volume of the first hour.

Expect the positive momentum to resume, with prices likely to head towards 5,650 and 5,300 to act as support. The CEO of L&T Technology services management reportedly stated, "Spring is around the corner," which made the company seem quite optimistic. In the upcoming quarters, Nuvama anticipates a significant increase in revenue for both the firm and the ERD sector.

“The ERD segment held up well in a weak macro environment through CY23, and is now staring at strong growth driven by the pickup in execution of already awarded deals and sustained demand across segments. We expect LTTS to lead the way for the recovery in the segment driven by its strong capabilities and diversified profile," the brokerage said in its report.

Brokerage has retained its their EPS estimates for FY24 and FY25 following the 3QFY24 results. “We retain our BUY rating on L&T Technology with a target price of 6,220 (based on 35x FY26E EPS), considering a better outlook for the ER&D services industry compared to the broader IT services universe, and the growing penetration of outsourced ER&D services," the brokerage said.

Furthermore, Motilal Oswal stated that the firm could profit from the increased ER&D expenditure because of its excellent capabilities, multi vertical presence, and significant wallet share. Digitisation is the main force behind this trend. The firm is anticipated by the brokerage to exhibit robust sales growth in the upcoming years.

L&T Technology Services Limited on Tuesday reported a net profit of 336.2 crore for the third quarter of FY24, registering a growth of 13.3% from 296.8 crore in the corresponding quarter of last year, the firm said in a regulatory filing. L&T Technology’s revenue in Q3FY24 increased 12.3% to 2,421.8 crore, from 2,157 crore, YoY.

Among other details, the firm said that the EBITDA of 487.7 crore for the quarter was registered up 11.9%, from 435.6 crore in the corresponding quarter of last year. The EBIT margin stood at 17.2%, compared to 17.3% YoY. Livemint tops charts as the fastest growing news website in the world to know more.

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