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Since L&T Technology Services Limited (NSE:LTTS) released its earnings in March 2019, analyst consensus outlook appear cautiously subdued, as a 7.1% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 31%. Presently, with latest-twelve-month earnings at ₹7.7b, we should see this growing to ₹8.2b by 2020. Below is a brief commentary on the longer term outlook the market has for L&T Technology Services. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Check out our latest analysis for L&T Technology Services
What can we expect from L&T Technology Services in the longer term?
The longer term view from the 14 analysts covering LTTS is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of LTTS's earnings growth over these next few years.
This results in an annual growth rate of 11% based on the most recent earnings level of ₹7.7b to the final forecast of ₹10b by 2022. This leads to an EPS of ₹99.15 in the final year of projections relative to the current EPS of ₹74.06. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 15% to 13% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For L&T Technology Services, there are three key factors you should look at:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is L&T Technology Services worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether L&T Technology Services is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of L&T Technology Services? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.