Shares of L&T Technology Services Ltd. and L&T Infotech Ltd. hit record highs after brokerages lauded an improvement in their growth outlook and deal pipeline, among others.

While L&T Infotech stock gained as much as 2.8% in early trade on Monday to Rs 3,449 apiece, L&T Technology Services rose 5.5% to Rs 2,325. Both stocks are up for the fifth straight session.

This came as CLSA on Friday upgraded L&T Technology Services to ‘outperform’ from ‘underperform’ and raised its price target to Rs 2,020 apiece from Rs 1,750, citing an improvement in the company’s long-term growth outlook on the back of recent deal wins.

“The deal wins add to the steady (albeit slow) demand revival in the ER&D (engineering, research, and development) service market and should drive a meaningful improvement in revenue growth and margins,” CLSA’s Pankaj Kapoor said in a note. The research firm also raised the company’s FY22/23 EBIT estimates by 8% and 10%, respectively.

L&T Technology Services’ margin, according to CLSA, too, is likely to improve as revenue growth resumes despite wage hikes and normalisation of visa/travel costs in FY22.

Separately, B&K Securities picked L&T Infotech as one of its preferred bets within the tier-2 technology companies, citing better growth story, strong deal flow and cost management.

The company is focussed on a net profit margin band of 14-15% in the longer term, led by cost optimisation initiatives and consistent hedging strategy, the brokerage said in its note released on Monday. “L&T Infotech will maintain its industry-leading growth in FY21 as it did for the last four years,” B&K Securities said, as it upgraded the stock to ‘buy’ from ‘outperform’. It also raised its price target to Rs 3,700 apiece from Rs 3,000 apiece.

Of the 31 analysts tracking L&T Infotech, 22 have a ‘buy’ rating, four suggest a ‘hold’ and the rest recommend a ‘sell’. The stock is trading 6% higher than its Bloomberg 12-month consensus price target of Rs 3,234.3 apiece.

Of the 22 analysts tracking L&T Technology Services, 11 have a ‘buy’ rating, six suggest a ‘hold’ and five recommend a ‘sell’. The stock is trading 21.1% higher than its Bloomberg 12-month consensus price target of Rs 1,790.8 apiece.

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