L&T Technology Services Shares Surge Nearly 15% After Q2 Earnings Beat Estimates

Shares of L&T Technology Services (LTTS) surged nearly 15% on Wednesday after the engineering services company reported better-than-expected second-quarter earnings.

The rally marked its strongest intraday gain since July 15, 2021, when shares had jumped 18.9%. However, the stock later pared gains and was trading 7.4% higher in the afternoon session. Despite the recovery, LTTS remained 11% lower for the year.

Revenue Growth Beats Estimates

The company reported constant-currency revenue growth of 2.7%, exceeding analysts' expectations of 1% to 1.2%. Its earnings before interest and tax margin improved 60 basis points sequentially to 16.3%, surpassing estimates of 16%.

Profit after tax increased 53.7% to ₹548.2 crore from ₹356.6 crore, supported by a one-time ₹165 crore gain from divesting its SWC business.

Excluding discontinued operations, profit increased 7.9%.

LTTS disclosed annualised revenue of $120 million from engineering intelligence-led solutions at the end of September.

Artificial intelligence-related contracts accounted for 50% of the quarter's total contract value.

The company expects third-quarter wage increases to affect margins by 50 to 80 basis points but anticipates maintaining margins around 16%.

It reiterated its five-year revenue growth aspiration of 13% to 15% annually, alongside margins of 16% to 17%.

The board also approved an interim dividend of ₹20 per share, with Oct 27, 2026, fixed as the record date.

After the results, several brokerages raised their target prices for the stock. According to a report by CNBC TV-18, IDBI Capital Markets upgraded LTTS from 'hold' to 'buy', raising its target price from ₹3,625 to ₹4,170.

Among 33 analysts covering LTTS, 16 recommend buying the stock, 12 advise holding it and five maintain sell ratings. The upgrades followed stronger quarterly performance and growing contributions from AI-related engineering services.