L&T Technology (LTTS)

FairStock Score: 59/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 20.69% and ROCE of 28.29% reflect strong capital efficiency
• Low leverage with debt/equity of 0.10, plus Altman Z of 4.83 and Piotroski 8/9 indicate financial health
• Promoter holding of 73.58% aligns management with minority shareholders
• Free cash flow of ₹972 Cr and dividend yield of 1.57% provide cash support
• Revenue CAGR of 14.38% and latest sales growth of 14.92% demonstrate business momentum

Concerns

• Expensive valuation: P/E of 29.00 and P/B of 6.01, with price far above Graham Number of ₹1,239.44 and DCF value of ₹967.25
• Profit growth is negative at -2.96% despite sales growth, indicating margin compression
• Negative EV/EBITDA of -26.96 is unexplained and warrants careful scrutiny
• FairStock Score of 60/100 suggests only steady, not compelling, quality at this price

AI Analysis

As a value investor, I first ask whether the business earns a good return on capital, and LTTS does. ROE at 20.69% and ROCE at 28.29% are attractive, with debt/equity just 0.10 and promoter holding at 73.58%, so interests are aligned. The Piotroski score of 8/9 and Altman Z of 4.83 suggest a financially sound enterprise. Free cash flow of ₹972 Cr gives it breathing room. The business has grown steadily too, with a five-year revenue CAGR of 14.38% and latest sales growth of 14.92%. In Buffett's language, this is a decent, durable business. But Graham's lesson is that no business is worth any price. At ₹3,449.10, the stock trades at 29 times earnings and 6 times book value. The Graham Number works out to ₹1,239.44, and the DCF value is just ₹967.25. That means my margin of safety is deeply negative, around -183%. Even a quality stalwart cannot justify paying nearly three times its intrinsic value. Worse, while sales grew, profit declined by 2.96%, and the latest quarter's net profit of ₹303 Cr on revenue of ₹2,924 Cr hints at margin pressure. The negative EV/EBITDA of -26.96 is a red flag that I must understand before committing money. I admire the business. I would not admire buying it today. I would wait on the sidelines until the price offers a proper margin of safety or until earnings growth catches up with the optimism embedded in the price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer