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In USD terms, L&T Technology Services share analysis had sequential revenue growth of 4.2% QoQ and crossed the $800 million run rate on an annualized basis. Growth was broad-based with 4 of 5 segments growing in the range of 4% to 8% led by Industrial Products. The EBIT margin of 17.3% despite wage hikes reflects the gradual portfolio shift towards more digital engineering as well as operational efficiencies around the hiring of freshers, cross-skilling, productivity improvements, and cost optimization. They won 11 deals across all segments, out of which 6 deals were 10 million-plus - two of these were actually 25 million-plus TCV.
As part of the strategy to build scale in core new technology areas, they have identified 6 strategic investment areas: electric autonomous connected vehicles (EACV), 5G, Med-tech, digital manufacturing, AI&ML driven smart products, and sustainability. On the innovation front, they filed 23 patents in Q1, this is a record high.
Revenue: 1,518 crores, a growth of 5.4% on a sequential basis.
Back on double-digit year-on-year growth with Q1 revenue up 17% year-on-year.
EBIT margin crossed 17% in Q1 making it the 4th consecutive quarter of operating margin improvement. The 70 basis points sequential improvement in EBIT margin to 17.3% was driven by portfolio shift towards digital engineering, operational efficiency measures including productivity improvement, cost optimization, and rupee depreciation that together helped fully observe wage hike, higher subcontracting, and third-party contracting expense.
Net Income for the quarter stood at 216 crores which are 14.2% of revenue, and up 11% on a sequential basis driven by higher revenue and operating margin.
Transportation: Sequential growth of 4.3% led by strong demand in electrification-led programs and platform development across both Auto and Trucks and Off-highway.
Plant Engineering: 4% QoQ growth with growth being driven by FMCG followed by Oil & Gas and Chemicals.
Industrial Products: 8% QoQ growth with all three sub-segments showing good growth - Electrical, Machinery, and Building automation.
Telecom and Hi-tech: growth rate is 4% driven by Semi, Consumer Electronics, and Telecom.
Had a soft quarter in medicine. Looking to improve. But they see the outlook improving for diagnostic devices with the rising vaccine penetration in the US and Europe.
Our Digital Engineering revenues were 54% in Q1 versus 52% in Q4. We see this trend continuing.
North America: 62.3%, 5.5% QoQ, 22.4 %YoY
Europe: 16.8% , 4.8% QoQ, 26.1%YoY
India: 12.9%, 2.9% QoQ, 19%YoY
Rest of the world: 8%, -4.7% QoQ, -1.1%YoY
Clientele: L&T Technology Services Fundamental Analysis
No of active clients = 305
No of 1 Million dollar + = 122
Human Resource: L&T Technology Services Share Analysis
Total Headcount 16,972
Attrition (LTM)% : 14.5%
Deals: L&T Technology services Result Analysis
An American automotive supplier has selected LTTS as a strategic partner to provide engineering services for their EV and Power Electronics product portfolio. LTTS will also be setting up a center of engineering excellence which will be leveraged by the global technology teams in North America, Europe, and Asia.
A global aerospace and defense company has awarded LTTS a program to support end-to-end engineering activities in a managed serviced model. The scope of work includes ownership of select R&D, lab activities as well as testing and certification infrastructure projects.
Strong demand outlook in both US and Europe, while in Japan and India the decision-making environment is slowly recovering.
Raised the USD revenue growth guidance to 15% to 17% for FY22.
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