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L&T Technology: LTTS Q1: Net profit up 13%, revenue up 14.7%

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L&T Technology Services Limited reported a 13% increase in net profit for the first quarter of financial year 2023-24 at Rs 311 crore. Revenue for the quarter was Rs 2,301 crore, up 14.7% over the year led by strong growth in the transportation vertical.

Sequentially, net profit was down 8.5% while revenue was down 2.9% after segments like consumer electronics and semiconductor engineering business saw some pressure during the quarter. This came amidst delayed decision making by clients and a weak macro economic environment.

The company completed the acquisition of Smart World & Communication (SWC) during the quarter. Excluding the acquisition, revenue was up 12.6% over the year and flat sequentially.

The company maintained dollar revenue growth guidance of 20% plus in constant currency for the fiscal year.

LTTS chief executive Amit Chadha told ET that the company had witnessed some delays in deal closure and smaller clients were being prudent with cash. However, most of the recovery is expected in the ongoing quarter.

“If I look at the short term, I expect transportation, plant engineering, industrial products segment and SWC to show sequential growth next quarter,” said Chadha adding that any further further pain in semiconductor and consumer electronics business could dampen growth for the hitech segment in Q2.

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Operating margin for the quarter stood at 17.2%, down 50 basis points sequentially and down 20 basis points over last year. “We had a quarter of strong deal wins across all five segments, the highlight being a $50 million plus deal in telecom and hitech,” he said.

On a year on year basis, all verticals reported growth. On a sequential basis, barring telecom and hitech vertical which was down 12.8% over the quarter, and plant engineering which was down 4.5% sequentially, all other verticals reported moderate growth. These verticals contribute almost 30% of the revenue.

“See plant engineering business depends on inputs coming in from customers in the real time. So some of those inputs delayed three of our projects, and therefore we declined this quarter but the business has not gone away. So we will recover next quarter onwards,” said Chadha.

Among geographies, India revenue was down almost 20% over the quarter which was a result of the impact from SWC acquisition.

During the quarter, LTTS won a $50 million plus deal, and additionally five deals with TCV of more than $10 million each. The company announced that it has won the $50 million 5-year deal from a a global technology company

Headcount was up by 318 over the quarter to 23,392. Attrition was down to 18.9% compared to 22.2% last quarter. “We are rolling out increments in July. Some letters have already been rolled out and the rest will follow, effective July 1st,” he said.

He added that the company expects to add around 750 employees next during the ongoing second quarter.

The company has built a 200-member team dedicated to working on AI solutions with plans to expand it to 2000 over the next few quarters. The company has similar plans for software defined vehicles and cybersecurity solutions, he added.

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