L&T Tech shares get a downgrade, JPMorgan cuts target by 18% on headwinds, margins pressure

Global brokerage firm JPMorgan has downgraded shares of L&T Technology Services Ltd. (LTTS) on Friday, June 27, and has also slashed its price target on the stock.

JPMorgan has downgraded L&T Tech to 'Neutral' from its earlier rating of 'Overweight' and has cut its price target by 18% to ₹4,100 from ₹5,000 earlier. The revised price target implies a downside of 5% from Thursday's closing price.

The brokerage expects the company's mobility segment, which contributes 33% of revenue in FY25, to see extended headwinds, similar to the concerns recently flagged by KPIT Technologies.

This, it believes, will drag overall revenue growth in FY26 to below 10%, which is lower than the company's double-digit growth guidance. Organic revenue growth is now expected at just 3%, below the company's earlier forecast of more than 6.7% in FY25.

Additionally, JPMorgan expects continued weakness in the Hi-Tech segment, which contributes 37% of LTTS's revenue. The brokerage said these pressures would negatively impact margins due to operating leverage.

JPMorgan expects L&T Technology Services to lower its revenue guidance for FY26 over the next four months, which will be a negative catalyst for the stock.

Accordingly, it has cut its earnings estimates by 9-11%, factoring in both revenue and margin pressures, and has reduced the target price-to-earnings (PE) multiple from 32 times to 28 times.

Out of the 34 analysts that have coverage on L&T Tech, 13 of them have a 'Buy' rating, 10 say 'Hold', while 11 of them have a 'Sell' recommendation.

Shares of L&T Technology Services Ltd. are currently trading 0.72% higher at ₹4,353.05. The stock is down over 7% on a year-to-date basis.

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