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L&T Technology Services’ Q1 result is out! The shares surge right after the announcement

15 September 20225 mins read by Angel One
L&T Technology Services’ Q1 result is out! The shares surge right after the announcement
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L&T Technology Services has reported a jump of 84% in their net profit as issued on Wednesday, amounting to Rs. 216.2 crores. The company’s overall revenue has also increased by 19.42% to Rs. 1562.6 crores for this quarter, and the operating profit has increased 5.20% to 17.3%, the highest in recent times.

Following a strong result in the June quarter, stocks of L&T Technology Services are improving, gathering as much as 15% during the early hours of Thursday.

After this early progression, the stock hit Rs. 3345 early on Thursday and remained just shy of the 15% circuit limit. The final stock price of L&T’s technological division closed at Rs. 3455 on Thursday.

At the time of writing, stock prices of L&T Technology Services were trading at Rs. 3392.95, which is about a 2% decrease from yesterday’s closing price.

What’s fuelling this growth?

Following this announcement, a senior member of L&T Technology Services has shed some light on the growth factors. He began his statement by pointing out the factor that post-lockdown normalisation in the US and Europe is playing a part here, as these two continents contribute about 80% to the company’s revenue.

He is hopeful that their India and Japan operations will soon be on track to become normal.

According to his statement, the company is planning to up its revenue growth by 15 to 17% in this financial year. Their earlier prediction was 13 to 15%, but they are revising it owing to the recent prospects. Additionally, they are also confident about their profit margins.

He further added –

This increase in profit margin is expected owing to higher digitisation and improvement in the volume of offshore work. As a result, it is upped to 58% from 50% before the pandemic. Additionally, the company believes there is headroom to improve offshore revenue by another 1-2%.

Why invest in L&T Technology Services?

The engineering service arm of Larsen and Toubro Group has reported a substantial jump in their net profit in the first quarter of this financial year, compared to that of the last one.

Here are some key strengths of L&T Technology Services to be aware of:

  • A steady increase in revenue and profit in the past 3 quarters
  • Book value of shares are also increasing for past 2 years
  • The company has no debt, as reported
  • It has no promoter pledge
  • The stock prices are at a new 52 week high

Moving ahead

The company is confident about widening its profit margins despite confirming increments for junior and mid-level employees from April, and the same for seniors will be applicable from July. They believe it is a sign of things getting back to normal.

Additionally, the company has also opened its employment drive to hire 300 freshers in the first quarter. Its target is to increase this number to 1500 by the end of this financial year.

Also, their offices in the US, Europe (barring the UK) and Israel have started operations. L&T Technology Services believes that things will get back to normal by the start of 2022. Moreover, the company has plans to expand office spaces in India and open new facilities as required.

It has also identified 5 key areas of focus and future growth. These are:

  1. 5G technology
  2. Digital manufacturing
  3. Sustainability of artificial intelligence and machine learning
  4. Medical technologies
  5. Automated electric vehicles

They believe the capital expenditure associated with this will remain 1 to 2% of the revenue band.

Parting thoughts

L&T Technology Services has been a renowned brand in the ER&D, i.e. Engineering Research & Development space of India. Hence, a surge in share prices due to the revenue result of a quarter is expected, but it is wise to be patient and attentive before making any decision. Nonetheless, considering its track record and present growth, it offers a lucrative investment option.

For more updated news on the stock market and investment, keep referring to the Angel One Blogs.


Frequently Asked Questions

  1. When was the L&T Technology Services incorporated?

L&T Technology Services was incorporated in 2012.

  1. Who is the promoter of L&T Technology Services?

Larsen and Toubro Group is the promoter of this company.

  1. What is the current market capitalisation of L&T Technology Services?

The current market capitalisation of L&T Technology Services is Rs. 35,333 crores.

  1. What is the current dividend yield of L&T Technology Services?

The current dividend yield of L&T Technology Services stands at 0.65%.

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