Shares of L&T Technology Services (L&T Tech stock) soared as much as 10% on January 16, 2025, following the release of the company’s strong Q3 earnings report. The stock surged on the back of impressive quarterly performance and the highest-ever large deal bookings recorded in Q3.
L&T Tech Q3 Performance Highlights
For the December quarter (Q3 FY25), L&T Technology Services posted a near 1% sequential increase in net profit to ₹322.40 crore, signaling solid profitability despite global market challenges.
Revenue for the quarter stood at ₹2,653 crore, a 3.1% growth compared to ₹2,572.9 crore in Q2 FY25. This revenue growth was driven by eight large deals won across various business segments, marking the highest-ever large deal bookings for L&T Tech. The average tenure of these large deals was three years, which is expected to provide significant future earnings stability.
At 10:13 AM, L&T Tech stock was trading at ₹5,197.20 on the NSE, up by 8.03%. Earlier in the session, the stock had surged to a high of ₹5,336.90, driven by investor optimism.
L&T Tech CEO Optimistic Outlook
In an encouraging statement, Amit Chadha, CEO and Managing Director of L&T Technology Services, expressed confidence in the company’s future. He remarked that Calendar Year 2025 (CY25) would surpass CY24, with the company’s deal pipeline being larger than a year ago. He highlighted the presence of multiple $50 million and $100 million deals in the pipeline, signaling strong future revenue potential.
Chadha also mentioned the company’s expectation of robust growth driven by continued success in securing high-value contracts, further solidifying investor confidence.
Revenue Growth Guidance Upgraded
In light of the strong performance, L&T Tech slightly raised its FY25 revenue growth guidance to 10%, up from the previous range of 8-10%. This upward revision factors in a 2% growth benefit from the company’s recent acquisition of Intelliswift, a move that has expanded its service offerings and market reach.
However, the company has slightly lowered its margin expectations. For the organic business, management anticipates FY25 margins to be around 16%, but for the combined business, which includes Intelliswift, the margin is expected to be around 15%, reflecting a 150-basis-point impact from the acquisition.
Nuvama’s View on L&T Tech Stock
Despite the strong Q3 earnings and positive growth outlook, Nuvama Institutional Equities notes some concerns regarding L&T Tech’s margin profile. The firm highlighted that acquisitions, including SWC and Intelliswift, could weaken margins in the near term. However, Nuvama maintained a ‘hold’ rating on L&T Tech stock while slightly raising its price target to ₹5,150 to reflect the company’s optimistic future outlook.
Market Reaction and Future Prospects
The market responded positively to L&T Tech’s Q3 results, and analysts are hopeful about the company’s future trajectory. While concerns about near-term growth in the Engineering Research and Development (ERD) industry remain, the company’s strong deal bookings and large deal pipeline point to a solid FY25.
With the increased FY25 revenue guidance and optimism from the CEO’s statements, L&T Tech stock is likely to remain in focus for investors looking for growth in the IT services sector.
L&T Tech’s Deal Wins Drive Confidence
L&T Tech’s ability to secure high-value deals, especially in key areas of engineering and digital transformation, positions the company as a strong player in the global IT space. The large deal bookings recorded in Q3 are expected to provide a strong revenue foundation going forward, which should continue to benefit the stock performance.
Conclusion: A Positive Outlook for L&T Tech Stock
Investors reacted strongly to L&T Technology Services’ stellar Q3 earnings and record deal bookings, sending the stock soaring by 10%. With the company’s revised revenue growth guidance and an impressive deal pipeline, L&T Tech remains a strong contender in the IT services sector. While there are short-term margin concerns due to acquisitions, the long-term outlook for the company appears robust, making it a stock to watch in 2025.
Key Takeaways:
- L&T Tech Stock Q3 earnings showed growth in both profit and revenue.
- The company secured eight large deals, marking the highest-ever deal bookings in Q3.
- FY25 revenue growth guidance was raised to 10%.
- Despite some margin concerns, analysts remain optimistic about the company’s prospects.
- Stock price surged by 10% in response to strong earnings and a promising future.
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