L&T Technology Q2 Results: Revenue Up 4%, FY24 Guidance Cut On Delayed Decision-Making

L&T Technology clocked a revenue of Rs 2,386.5 crore in July-September quarter with an operational profitability of 17.1%.

<div class="paragraphs"><p>Amit Chadha, chief executive officer and managing director at L&amp;T Technology Services. (Source: Company)</p></div>
Amit Chadha, chief executive officer and managing director at L&T Technology Services. (Source: Company)

L&T Technology Services Ltd. has lowered its growth guidance for the fiscal ending March 2024, even as its top-line met analyst estimates in the July-September quarter.

Revenue of the L&T Group company rose 3.69% over the previous three months to Rs 2,386.5 crore in the quarter ended Sept. 30, according to an exchange filing on Tuesday. That compares with the Rs 2,387.66-crore consensus estimate of analysts tracked by Bloomberg.

L&T Technology Q2 Results: Key Highlights (QoQ)

  • Revenue up 3.69% at Rs 2,386.5 crore (Estimate: Rs 2,387.66 crore).

  • EBIT up 3.06% at Rs 407.5 crore (Estimate: Rs 398.25 crore).

  • EBIT margin down 11 basis points at 17.07% (Estimate: 16.68%).

  • Net profit up 1.21% at Rs 315.9 crore (Estimate: Rs 312.05 crore).

  • Interim dividend of Rs 17 per share declared.

In dollar terms, L&T Technology's revenue grew 2.9% quarter-on-quarter to $288.1 million. In constant currency terms, it was up 3.2% sequentially. The company now pegs its FY24 guidance at 17.5%-18.5% in constant currency terms, as against more than 20% estimated earlier.

“While longer term trends for ER&D remain strong, in the short term, we are seeing longer decision cycles and incremental headwinds from the macro stress in various geographies,” Amit Chadha, chief executive and managing director at L&T Technology Services, said in a statement. “We revise our dollar revenue growth guidance for FY24 to 17.5-18.5% in constant currency.”

India’s $245-billion-plus IT services industry is bracing for a slowdown, if not a total washout, in the fiscal ending March 2024 as enterprises in the U.S. and beyond cut back on technology to cope with high interest rates and inflation. L&T Technology's larger IT peers—Infosys Ltd. and HCL Technologies Ltd.—have pared their growth expectations for the rest of FY24, underscoring the pain they are under.

Dealmaking, however, was a silver lining for LTTS in the September quarter.

The pureplay engineering services company won seven $10-million-plus deals and six deals worth more than $15 million in the July-September period. It had a total of 362 active clients as on Sept. 30. The top 10 clients brought in more than a fourth of LTTS’ earnings.

“Deal momentum was strong with the highlights being a $10-million-plus deal win leveraging SWC capabilities in North America,” Chadha said. “This win has been the result of having a superior end-to-end technology stack for wireless and 5G communications, which is a key differentiator for us.”

Chadha attributed the decline in operational profitability to wage hikes.

“Our operational performance continues to be healthy with an EBIT margin of 17.1%—nearly flat on sequential basis even as we absorbed the wage hikes and the investments in new technologies,” he said. “We have taken measures to improve utilisation and optimise costs in line with our operations playbook.”

The company is now investing heavily in software-defined vehicles, artificial intelligence and cybersecurity, and training close to 2,000 employees in the new domains.

“Our collaboration with hyperscalers and chip companies is helping us develop AI solutions and services that address needs of industries like auto, manufacturing and medical,” Chadha said. “These conversations are helping us to advance resilience, growth and transformation agendas of our customers while adding more large deal engagements to our pipeline.”

On Tuesday, L&T Technology's shares fell 1.57% to Rs 4,615.45 apiece on the BSE even as the benchmark Sensex ended the day 0.39% higher at 66,428.09 points. The quarterly results were declared after market hours.

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