Shares of L&T Technology Services. a leading engineering services company, declined as much as 4 percent in trading on Friday after its December quarter revenue growth missed expectations and the management also cut guidance for the full year.

The company reported US Dollar revenue growth of 0.4 percent quarter-on-quarter. The street though, was expecting the growth to be 2 percent.

Full year revenue growth guidance also saw a cut. The company now expects revenue growth for the current financial year to be 15 percent, down from their earlier guidance of 15.5-16.5 percent.

On the positive side, the company's EBIT margin expanded 50 basis points during the quarter to a record high of 18.7 percent. This is the sixth consecutive quarter where the margin has been in excess of 18 percent.

The company had five deal wins with total contract value (TCV) in excess of $10 million.

L&T Technology Services has also been chosen as a strategic engineering partner to Airbus, to provide advanced engineering capabilities and digital manufacturing services under a multi-year contract. LTTS will support Airbus in key verticals and technology areas for its ongoing commercial and innovation programs.

Financial size of this deal is undisclosed.

In order to meet its aspiration of a $1.5 billion revenue run rate by financial year 2025, the company's management said that it is making strategic investments towards the same.

After the earnings, Morgan Stanley issued an ‘underweight’ rating on the L&T Tech stock and also cut its target price to Rs 3,150.

The brokerage believes that the latest acquisition done by the company will drive a slight cut in Earnings per Share (EPS) estimates and can turn out to be a near-term drag on multiples.

On Thursday, L&T Technology Services had announced that it will acquire the Smart World & Communication (SWC) business of its parent company L&T.

Shares of L&T Technology Services are trading 3.3 percent lower at Rs 3,284.

First Published:Jan 20, 2023 10:49 AM IST