Here is a detailed analysis of L&T Technology Services recent Q2 report, providing insights into its financial performance, significant announcements, and key operational achievements during the period.
Table of Content
Performance Highlights
- Revenue at ₹ 2,386.5 Cr; growth of 5% YoY and 4% QoQ
- USD Revenue at $ 288.1 million; growth of 1.4% YoY and 3.2% QoQ in constant currency
- EBIT margin at 17.1%
- Net profit at ₹ 315.4 Cr; growth of 5% YoY
- Interim Dividend of ₹ 17 per share; Record date October 27, 2023
Additional Read: Q2 Results Dashboard
During the second quarter of 2023, L&T Technology Services Limited (LTTS) showcased its financial strength, further establishing its presence in the industry.
The company’s revenue for this period stood at ₹ 2,386.5 Cr. It reflects a 5% growth from the previous year and a 4% rise when compared to the previous quarter.
When we look at this revenue in US dollars, it translates to $288.1 million. To provide more context to these numbers, there’s a 1.4% increase year-on-year and a 3.2% growth from the previous quarter when we factor in constant currency rates.
The EBIT margin, a reliable indicator of a company’s profitability, was recorded at 17.1%. This indicates the company’s ability to generate profit from its primary business activities, emphasising its operational expertise.
Regarding net profit, LTTS reported a figure of ₹ 315.4 Cr this quarter, marking a 5% growth from the same period in the previous year.
For those with a stake in the company, there’s encouraging news. LTTS announced an interim dividend of ₹ 17 per share, a move that underlines the company’s strong financial position and its dedication to rewarding shareholders. Note: that the dividend’s record date is set for October 27, 2023.
The financial metrics for LTTS in Q2 highlight the company’s commitment to steady growth and a stable position leading to an Earnings Per Share (EPS) of ₹ 28.41.
Additional Read: L&T Technology Services Share Price
Management Commentary
LTTS has not just navigated the challenges but has flourished in them, registering a 3.2% sequential growth in constant currency. This growth is spread evenly across all five segments of their business. Their ability to clinch significant deals is evident, with:
- Seven deals, each exceeding USD 10 million in Total Contract Value (TCV).
- Six of these deals were a whopping USD 15 million each.
- One such landmark deal, valued at USD 10 million, originates from North America. This collaboration showcases LTTS’s superior technology capabilities, particularly in wireless and 5G communications.
Their operational performance remains steady with an EBIT margin at 17.1%. Even with the pressures of increased wages and investments in new tech, they’ve managed to hold their ground. Their forward-thinking strategy is clear, with a focus on software-driven vehicles, AI, and cybersecurity. They have training sessions in the pipeline for almost 2,000 staff members.
While the long-term perspective remains optimistic, they do anticipate short-term challenges due to longer decision-making processes and potential economic challenges in various regions. Therefore, their revenue growth projection for FY24 stands adjusted to a range of 17.5% – 18.5% in constant currency.
Operational Highlights
- A significant deal with a global oilfield services provider for their digital transformation.
- Partnerships with leading healthcare providers and a global battery manufacturer to spearhead platform development and vehicle electrification programs.
- A notable 5G Center of Excellence is in the pipeline with a 5G wireless connectivity provider.
- Bagged a significant project from a renowned European fragrance and nutrition company, adding to the diverse portfolio.
- Their partnership extends to a leading metro railway operator and a global diversified tech conglomerate in the USA for various Aerospace R&D initiatives.
- LTTS has been chosen by a global automotive parts supplier as a trusted Engineering partner for multiple business units.
Recognitions
– Recognised as leaders by ISG in the domain of Manufacturing Industry Services and Solutions for 2023.
– Awarded by the Everest Group for their stellar work in Automotive Engineering Services for 2023.
– Their smart city projects have been presented with the RoSPA Gold Health & Safety Awards.
– They’ve clinched the coveted Golden Peacock Award for ESG in 2023.
– FICCI honoured LTTS with the HR Innovation Award for 2023.
– CEO Amit Chadha was felicitated as the Corporate Leader of the Year 2023 by the Indo-American Chamber of Commerce.
YoY Comparison: Reported Financial Figures
| Q2 FY23 | Q2 FY24 | YoY | |
| Revenue | ₹ 2,281 Cr | ₹ 2,386.5 Cr | 4.6% |
| Gross Profit | ₹ 665.0 Cr | ₹ 669.0 Cr | 0.6% |
| EBITDA | ₹ 437.4 Cr | ₹ 475.6 Cr | 8.7% |
| EBIT | ₹ 378.4 Cr | ₹ 407.5 Cr | 7.7% |
| Net Income | ₹ 299.9 Cr | ₹ 315.4 Cr | 5.2% |
About L&T Technology Services
L&T Technology Services Limited (LTTS), under the Larsen & Toubro Limited umbrella, is renowned for its expertise in Engineering and R&D (ER&D) services. LTTS’s offerings include consultancy, design, development, and testing solutions that cover the entire product and process development life cycle. With an impressive roster of clients including 69 Fortune 500 companies and 57 leading ER&D organisations, they have a strong presence in various sectors like industrial products, medical devices, and telecom, among others. Headquartered in India, LTTS has a team of over 23,800 employees, spread across an impressive 22 global design centres, 28 sales offices, and 102 innovation labs.
Source: https://www.ltts.com/system/files/2023-10/LTTS-Q2FY24-Investor-Release.pdf
