Midcap stock falls 5% following weak Q3 results and a cut in FY26 growth guidance

Synopsis: Shares fell 5% after weaker Q3 results and a cut in FY26 growth guidance. Constant-currency revenue declined 2.8% QoQ, despite margins improving to 14.6%. Brokerages trimmed targets to  Rs 4,745 and  Rs 3,900, citing near-term growth concerns despite a strong deal pipeline.

The shares of leading engineering and technology service providers plummeted up to 5 percent in today’s trading session after the company posted weaker earnings in Q3FY26 & lowered its FY26 guidance.

With a market capitalization of Rs 42,827.10 crore, the shares of L&T Technology Services Ltd were trading at Rs 4,042.55 per share, decreasing around 5 percent as compared to the previous closing price of Rs 4,245.30 apiece.

Q3FY26 Highlights

The shares of L&T Technology Services Ltd have seen bearish movement after announcing its financial performance in Q3FY26, in which revenue increased by 10 percent on a year-on-year basis from Rs 2,653 crore in Q3FY25 to Rs 2,924 crore in Q3FY26. However, on a Quarter-on-Quarter basis, revenue plummeted by 2 percent from Rs 2,980 crore in Q2FY26 to Rs 2,924 crore in Q3FY26.

Moreover, net profit decreased by 5 percent on a yearly basis from Rs 320 crore in Q3FY25 to Rs 303 crore in Q3FY26, meanwhile, on a quarter-on-quarter basis, net profit decreased by 8 percent from Rs 329 crore in Q2FY26 to Rs 303 crore in Q3FY26.

The quarter delivered a mixed performance, with constant currency revenue falling 2.8% QoQ. Margin performance was a positive surprise, as EBIT margin improved to 14.6%. Profitability was weighed down by an exceptional loss of  Rs 35.4 crore.

The company revised its FY26 outlook, cutting constant-currency revenue growth guidance from double digits to mid-single digits. The shift reflects a strategic focus on improving margins and cost discipline rather than aggressively chasing topline growth in a softer demand environment.

L&T Technology Services reported strong deal momentum, closing multiple multi-million-dollar engagements across auto, energy, semiconductors, medical devices, and manufacturing. Wins span infotainment engineering, AI-led information management, LNG facility design, smart automation, and multi-year product development programs, strengthening long-term revenue visibility and its positioning in advanced ER&D and digital engineering services.

Brokerage Comments

HSBC maintained a Hold rating on L&T Technology Services, but cut its price target to Rs 4,745 after a weak Q3 performance. The brokerage said revised guidance points to organic revenue decline in FY26, while unchanged margin targets raise concerns. Despite strong ER&D capabilities, near-term growth is expected to lag peers.

Nomura, meanwhile, retained a ‘Reduce’ rating with a price target of  Rs 3,900, citing a sharp Q3 revenue miss due to restructuring, impacting nearly 5% of the business. While it acknowledged strong deal wins and a healthy pipeline, Nomura flagged valuation concerns at ~29x FY27 earnings, noting upside hinges on faster growth and margin recovery.

L&T Technology Services Ltd is a global engineering and technology services company specialising in ER&D, digital engineering, and product lifecycle solutions. Part of the Larsen & Toubro Group, it serves clients across automotive, aerospace, industrial products, telecom, and medical devices markets worldwide.

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