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Q4FY21 Conference call highlights of L&T Infotech

Q4FY21 Conference call highlights of L&T Infotech

Published on 07 May 2021 Views 155 Comments 0
  • Q4FY21 and FY21 Results
    • Another year of industry leading growth with revenue growth in cc terms to the tune of ~7.1% YoY and 4.4% QoQ.  
    • Digital Revenues account for ~45% of the total revenue in Q4FY21.  
    • Operating profit margins impacted by wage hikes rolled out in Jan’21 which was offset by operational efficiencies leading to decline of 120bps QoQ in operating profit margin at 19.4% in Q4FY21.
    • DSO improved to 61 days as compared to 63 days in last quarter
    • Company’s revenue grew 8.8% YoY in constant currency terms for FY22.
    • Company does not find reporting revenue mix as Digital and traditional services relevant and hence shall stop reporting it from Q1FY22.
    • Net working capital at 15.1% of revenue in FY21 as compared to 16.4% in FY20 .
    • Free cashflow as % of net income stands at 123.8% in FY21 versus 108% in FY20. Cash and cash equivalents at Rs. 4387.7 crores in FY21 as against Rs. 3856 crore in FY20.
  • Capital Allocation – Board of Directors have declared final dividend of Rs. 25 per share, which translates to Rs. 40 per share for FY21 , including the interim dividend of Rs.15 paid in Oct’20.  Company aims to continue the pay-out ratios in the similar range as it was in past years.
  • Deal Wins
    • Two large deal wins – vendor consolidation which is a part of an insurance vertical in North America and second deal is in BFS space for digital transformation of one of the largest Islamic global bank to enhance its Islamic lending and finance capability.
    • The first deal has resulted in net new TCV of $21 mn for a tenure of 5 years. The second deal’s TCV is $45 mn and tenure is 2 years.
    • Overall healthy deal pipeline and company added two more companies from fortune 500 companies, taking the total to 71 (5 new additions in FY21).
    • In client satisfaction survey, customer experience index has improved greatly by 18% and scored well on responsiveness and client engagement.
  • Business Verticals
    • Carved out two separate units to focus on cloud and data products.
    • Entered into global strategic partnership with AWS to enable accelerated cloud adoption by enterprises.
    • Reached a significant milestone with Azure and LTI is now certified as expert managed service provider.
    • Near term focus in data products is to build dedicated go-to-market themes. Overall company is witnessing encouraging themes across cloud and data products.
    • One of the beneficiary of exponential growth in cloud -based application advancements is Enterprise applications market. To renew the approach to Enterprise applications market ,company has created a new sales unit called intelligent enterprise sales.
    • BFSI – new banking platform based on cloud technology and first client is European financial services client. Muted growth in insurance vertical mainly due to second wave of COVID pandemic.
    • Soft growth in Energy & utility mainly due to the impact of COVID and low oil prices in the first half.
    • Good traction in High Tech, media and entertainment sector. Fortune 500 global client added in this quarter.
    • Top 5 accounts have grown at 8% and Top 6- Top 10 accounts have grown at 9.4% and Top11- Top 20 have grown at 13.2% over the past 5 years.
  • Other Business Highlights
    • Anil Rander, recruited as CFO. He is a seasoned finance leader with over 27 years of multifaceted experience in driving business performance and growth. He joins LTI from Tech Mahindra Ltd., where he was Global Head of Finance for BPS.   
  • Employee Metrics
    • Large number of employees impacted due to second wave of COVID-19.
    • Advanced the performance appraisal cycles and salary hikes will be rolled out from April’21.
    • Full year utilisation including trainees at 80.5% as compared to 79.5% last year. Company aims to sustain this level of utilisation going ahead.
    • Added 2008 people during Q4FY21 and 4554 in FY21. Production associates account for 95% of the total workforce.  Company is planning to hire aggressively in FY22.
    • Attrition stood at 12.3% in Q4FY21 and expects similar attrition in Q1FY22 due to high demand.
  • FY 22 Guidance
    • Company remains optimistic for FY22 of registering industry leading growth and expects operating profit margins in the range of 14-15%.
    • Confident of growth prospects in all the business verticals.  
    • Geographical revenue mix to remain in similar range, with USA contribution majorly (~60%), followed by Europe, India and others.
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