L&T Technology Services Q1FY26 Results: Revenue Miss Despite Strong Deals—Should You Buy or Sell the Stock? | PL Capital
- 17th July 2025
- 03:00:00 PM
- 3 min read
Mumbai | July 17 – L&T Technology Services (LTTS) reported its Q1FY26 results with a revenue miss despite stable margins, as seasonal softness in the SWC segment and automotive sector weakness offset strong deal wins. While the company’s large deal TCV crossed USD 200 million for the third consecutive quarter, revenue growth challenges persist, keeping valuations capped in the near term.
LTTS reported a 4.2% QoQ decline in constant currency (CC) revenue to USD 335 million, underperforming PL Capital’s estimate of a 2.5% decline. EBIT margins, however, held steady at 13.3%, up 10 bps QoQ, aided by a higher contribution from the margin-accretive Sustainability business.
“Strong deal momentum is encouraging, but the execution ramp-up will be critical in H2 to deliver the guided double-digit growth,” said Pritesh Thakkar, Analyst at PL Capital.
Financial Snapshot: Q1FY26
- Revenue: USD 335 million, down 4.2% QoQ CC, down 2.8% QoQ USD
- EBIT Margin: 13.3%, up 10 bps QoQ
- PAT: ₹3,157 crore, up 1.5% QoQ
- Attrition: 14.8%, up 50 bps QoQ
- Net Headcount Decline: 632 employees
Deal Wins Strong, But Execution Key
LTTS won multiple deals in Q1, including one USD 50 million deal and several smaller wins, taking the large deal TCV to over USD 200 million for the quarter. Management highlighted that this level of deal wins is expected to become the new baseline, providing a foundation for H2 recovery.
“While the Sustainability segment posted 4.3% QoQ growth, the Mobility and Hi-tech segments declined 1.5% and 8.6% QoQ respectively, reflecting continued challenges in automotive and discretionary tech spending,” said Sujay Chavan, Analyst at PL Capital.
Geographically, India saw a steep 16.4% QoQ decline, while North America and Europe grew marginally by 1.3% and 0.7%, respectively.
Margins Hold, but Valuation Leaves Limited Upside
Management reiterated confidence in achieving double-digit CC revenue growth in FY26, with H2 expected to be stronger due to deal ramp-ups and seasonal tailwinds. LTTS aims to improve margins gradually over FY26, targeting a mid-16% EBIT margin by Q4FY27.
Despite these positives, LTTS currently trades at 30x FY27E earnings, offering limited upside. PL Capital values the stock at 29x FY27E EPS, maintaining a HOLD rating with a revised target price of ₹4,250.
“Valuations remain capped until consistent execution and margin improvements align with the deal momentum,” added Thakkar.
What Should Investors Do?
PL Capital advises investors to hold LTTS at current levels, awaiting clear signs of recovery in automotive and Hi-tech segments while monitoring execution on large deal wins.
“The pipeline is robust, and the business mix is improving with Sustainability driving margin support, but execution consistency is vital to justify premium valuations,” Chavan noted.
📄 Read the full PL Capital report on LTTS Q1FY26 results here.
PL Capital
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