Prabhudas Lilladher Holds LTTS at ₹4070 Target Amid Strategy Shift

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AuthorAarav Shah|Published at:
Prabhudas Lilladher Holds LTTS at ₹4070 Target Amid Strategy Shift
Overview

Prabhudas Lilladher reiterated a "Hold" rating for Larsen and Toubro Technology Services (LTTS), setting a target price of ₹4070. The report noted revenue adjustments due to strategic divestments of low-margin units, impacting near-term topline growth. However, the firm anticipates margin accretion and sustained growth through its "Lakshya" strategy.

Prabhudas Lilladher has maintained its "Hold" recommendation on Larsen and Toubro Technology Services (LTTS) with a target price of ₹4070. The brokerage's latest research report, dated January 16, 2026, highlights recent strategic decisions that are reshaping the company's financial profile.

Revenue Adjustments

LTTS's revenue performance for the last quarter showed a sequential decline of 2.8% in constant currency terms, falling below analyst expectations. However, this figure is not directly comparable due to the company's move to recalibrate certain business units. These divested operations were primarily low-margin and considered non-strategic, largely stemming from the Hi-Tech segment. Excluding these carved-out units, LTTS exhibited modest sequential revenue growth of approximately 1.1% in USD terms.

Strategic Realignment: The "Lakshya" Plan

Management has outlined a comprehensive five-year strategy, codenamed "Lakshya." This plan centers on doubling down on high-growth areas and enforcing a stringent focus on quality revenues, while actively eliminating commoditized services. Analysts believe this strategic exercise is inherently margin-accretive, with positive effects potentially visible from the current quarter.

Outlook and Financial Projections

Despite the strategic recalibration, the target of achieving around 16% operating margins remains intact. Prabhudas Lilladher is forecasting constant currency revenue growth of 5.0% for FY26E, 3.5% for FY27E, and 9.0% for FY28E. Margins are projected to rise from 13.9% in FY26E to 15.7% by FY28E. Concurrently, the firm has revised its Earnings Per Share (EPS) estimates downward by approximately 7% for both FY27E and FY28E. The target price of ₹4070 is derived by applying a 25x multiple to the estimated FY28E EPS.

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