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🚀 LTTS – Engineering the Future of Technology | Long-Term Investment Analysis

Lesson 124/228 | Study Time: 15 Min

Course: Top Quality Companies

🚀 LTTS – Engineering the Future of Technology | Long-Term Investment Analysis

📌 CMP: ₹4,238.50

🎯 Analysis Period: FY15–FY35 | Financials | Growth | Valuation | Technicals

Fairvalue: https://docs.google.com/spreadsheets/d/e/2PACX-1vRV5fYXG6KvzBaUBW2bzgFUQQWAOG1vouqqCPIaPqmBEpnHKFi2nDGXkp4-xY-0dGZSIqrXHmJiTfa5/pubhtml?gid=1657418791&single=true

🏢 Company Overview – L&T Technology Services (LTTS)

L&T Technology Services Ltd. (LTTS), a part of the Larsen & Toubro Group, is a pure-play Engineering R&D (ER&D) services company. It provides digital and engineering solutions across sectors like Hi-Tech, Transportation, Telecom, Plant Engineering, Industrial Products, and Medical Devices.

🌐 Industry Outlook – Engineering R&D (ER&D)

The global ER&D market is expected to exceed $1.9 trillion by 2026, with increasing outsourcing.
India’s ER&D exports to grow at a CAGR of ~12–14% over the next decade.
LTTS is among the top global ER&D service providers, well-positioned to ride the digital product engineering wave.

📊 Historical Performance (FY2015 to TRAILING FY26)

🔢 Revenue, Profit & Margins

Year	Sales (₹ Cr)	Profit (₹ Cr)	Profit Margin
TRAIL FY26	11,074	1,266	11.4%
FY25	10,670	1,264	11.8%
FY24	9,647	1,306	13.5%
FY23	8,815	1,216	13.8%
FY22	6,570	961	14.6%
FY21	5,450	667	12.2%
FY20	5,828	822	14.1%
FY19	5,301	768	14.5%
FY18	3,940	507	12.9%
FY17	3,307	425	12.9%
FY16	3,150	419	13.3%
FY15	2,586	315	12.2%

🔍 Insights:

4.3x Revenue Growth and 4x Profit Growth over the last 10 years.
Margins have started compressing post FY22 due to rising costs.

📈 Q1 FY26 Financial Highlights

Metric	Q1 FY26	Q1 FY25	YoY Growth
Revenue	₹2,866 Cr	₹2,462 Cr	✅ +16%
Expenses	₹2,501 Cr	₹2,091 Cr	❌ +20%
Profit	₹316 Cr	₹314 Cr	✅ +1%
EPS	₹29.81	₹29.65	✅ +1%
Operating Margin	11.0%	12.8%	❌ -1.7%
Interest Cover	222.2x	284.2x	❌ -22%

🧩 Segmental Revenue Breakdown – Q1 FY26

Segment	Revenue (₹ Cr)	Share	YoY Growth
🚗 Mobility	848	30%	❌ -2%
🌱 Sustainability	882	31%	✅ +19%
💻 Hi-Tech	1,136	40%	✅ +33%

📌 Hi-Tech and Sustainability are driving growth; Mobility slightly declined.

⚙️ Major Operating Costs – Q1 FY26

Cost Head	Value (₹ Cr)	% of Sales	YoY Growth
👨‍💻 Employee	1,591	64%	✅ +19%
📦 Other Ops	812	33%	✅ +20%
🏢 D&A	81	3%	✅ +11%
🏦 Finance Cost	1.65	<1%	✅ +26%

📉 High employee cost is a key reason for margin compression in recent quarters.

📐 Historical Valuation Bands – PE & PBV

🔺 PE Range

Year	Lower PE	Higher PE
TRAIL FY26	33	39
FY25	35	50
FY24	27	45
FY23	25	46
FY22	27	66
FY21	17	45
FY20	13	23
FY19	16	25
FY18	14	31
FY17	17	22

🔻 PBV Range

Year	Lower PBV	Higher PBV
TRAIL FY26	7	8
FY25	7	10
FY24	7	11
FY23	7	13
FY22	6	15
FY21	3	9
FY20	4	7
FY19	5	8
FY18	4	8
FY17	5	6

📌 LTTS consistently trades at a premium PE & PBV, driven by high RoE, brand strength, and low-cap competition.

🔮 Long-Term Estimates & Valuation Projections

Year	Sales (₹ Cr)	Profit (₹ Cr)	EPS (₹)	Fair Value Range (₹)	Book Value	PB Fair Range (₹)
2026E	12,377	1,361	129	3,232 – 5,171	₹618	₹3,707 – ₹4,943
2030E	20,181	2,603	247	6,180 – 9,888	₹905	₹5,427 – ₹7,237
2035E	35,565	4,588	436	10,891 – 17,425	₹1,457	₹8,741 – ₹11,654

Assumption: EPS & Book Value CAGR ~13% | Margin Stability Post FY26 ~12.9%

💼 Portfolio Weight Suggestion

Metric	Value
EPS Weightage	1.48%
Book Value Weightage	1.58%
PEG-Based Weight	1.59%
📊 Suggested	1.55%

🏆 Good for diversified portfolios with moderate weight (1.5%–2%).

📉 Technical Analysis – Chart Insights

🔍 Key Technical Observations:

5X in 8 Years with consistent dividends.
📉 Current Price: ₹4,238.50 | 🧭 50 EMA: ₹4,163.85
✅ Buy Zone: ₹3,333 – Historical support.
💰 Profit Booking Zone: ₹5,700 – Technical resistance.
Price is near 50-month EMA – a strong base for long-term SIP investors.
Volume profile supports consolidation and accumulation.

✅ Conclusion – Risk and Reward for Long-Term Investors

👍 Positives:

Leader in high-growth ER&D industry.
Strong Hi-Tech and Sustainability portfolio.
Solid track record of returns and dividends.
Long-term digital transformation tailwinds.

⚠️ Risks:

Margin pressure from rising costs.
Slower profit growth in FY25–26.
High valuations may restrict short-term upside.

🎯 Verdict: A high-quality compounder with strong fundamentals, suited for patient long-term investors. Buy on dips near ₹3,333 with SIP approach; partial profit booking suggested at ₹5,700.

🔖 Disclosure

This blog is for educational purposes and long-term investing awareness. It is not investment advice. Investors must conduct their own research before making decisions.

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Piyush Patel

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