An upbeat earnings performance by L&T Technology Services driven by record deal bookings triggered an upmove in the stock on Monday despite the management being cautiously optimistic about the engineering research and development (ER&D) industry.
Shares rose as much as 3 percent on BSE in the first trading session after the results were announced. At 9:50 am, shares of the technology company were trading 0.8 percent higher at Rs 3,118.45.
Brokerage firm CLSA believes the high sensitivity of ER&D spends to macro headwinds remains a longer-term risk.
JP Morgan, too, noted that the technology firm was witnessing some cautions concerning budgets in select segments and pointed out that the overall outlook was cautiously optimistic given macro concerns.
Choice Equity Broking reduced its target price on the tech stock from Rs 4,802 on the back of supply-side challenges and macro environment threats looming in the form of a global economic slowdown.
| Brokerage Firm | Rating | Target price |
| CLSA | Underperform | Rs 3,100 |
| Citi | Sell | Rs 2,810 |
| JP Morgan | Underweight | Rs 2,700 |
| Choice Broking | Outperform | Rs 4,750 |
The company has said that the second quarter of the current financial year would face headwinds from wage hikes, that would be doled out from July 22.
According to Citi, the hikes and measures to manage attrition would keep the margin in check.
L&T Technology Services shares have been the worst hit in the current bear phase in the IT basket. A stock or index is said to be in the bear zone once it retreats more than 20 percent from its recent peak.
The buying enthusiasm seen on Monday could largely be attributed to the company’s performance on most parameters, except margin.
Amit Chadha, chief executive officer and managing director, L&T Technology Services, said, “We started the new financial year on a strong note, with revenue growing sequentially and deal bookings at an all-time high.”
He reaffirmed the revenue growth guidance of 13.5-15.5 percent in dollar terms as he sees a broad-based pipeline of opportunities, which gives him the confidence that growth momentum would sustain.
Here’s a snapshot of the company’s earnings:
First Published: Jul 18, 2022 11:31 AM IST
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