Release Date: July 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- L&T Technology Services Ltd (BOM:540115, Financial) reported a 13.6% year-on-year increase in revenue in US dollar terms, showcasing strong growth.
- The sustainability segment achieved a 16.4% year-on-year growth, crossing the $100 million quarterly milestone, indicating robust performance in this high-margin area.
- The company secured over $200 million in large deal total contract value (TCV) for the third consecutive quarter, demonstrating strong deal momentum.
- L&T Technology Services Ltd (BOM:540115) launched Plex AI, a proprietary AI framework, enhancing their technological offerings and client partnerships.
- The company inaugurated a new design center in Plano, Texas, to expand its footprint in key markets and enhance capabilities in cutting-edge technology and AI.
Negative Points
- Quarter-on-quarter revenue declined by 2.9% due to SmartWorld seasonality and challenges in the automotive sector.
- The EBIT margin remained flat at 13.3%, with expectations for improvement in future quarters.
- The automotive segment faced short-term pauses and delayed starts in programs, impacting growth in this area.
- The company experienced a decline in revenue from top clients, attributed to challenges in the automotive sector.
- Free cash flow was negative INR28 crores due to the seasonality of the SmartWorld business, impacting cash reserves.
Q & A Highlights
Q: Can you explain the muted performance in the automotive sector and the margin outlook?
A: The automotive sector is facing challenges due to uncertainty in investment decisions between EV and ICE, and competition from Chinese EV players. However, LTTS is positioned to benefit from these dynamics with its solutions and expects a turnaround in the sector after a couple of quarters. Regarding margins, LTTS is focusing on large deal wins, productivity improvements, and operational efficiencies to achieve mid-16% EBIT margins by Q4 FY27 or Q1 FY28. (Amit Chadha, CEO & MD; Rajeev Gupta, CFO)
Q: How is the revenue conversion from recent deal signings, and can $200 million in large deal TCV be considered a new base for LTTS?
A: The revenue conversion is on track, with growth seen in the sustainability segment. LTTS aims to maintain and grow the $200 million large deal TCV as a new base, supported by a segmented sales approach and a robust pipeline. (Amit Chadha, CEO & MD)
Q: What is the outlook for the SmartWorld Communications (SWC) segment, and how does it impact overall business performance?
A: The SWC segment experienced a significant seasonal decline, but LTTS is working to stabilize this by focusing on international growth, particularly in the US and Middle East. The goal is to reduce the seasonal impact and achieve more consistent performance in the future. (Amit Chadha, CEO & MD; Abhishek Sinha, COO)
Q: Can you provide an update on the Intelliswift acquisition and its integration?
A: The integration of Intelliswift is progressing well, with a focus on leveraging synergies in hyperscalers and other subsegments. LTTS is confident in achieving its growth targets for Intelliswift, aiming to scale the business significantly over the next few years. (Amit Chadha, CEO & MD)
Q: Is the guidance for double-digit growth in FY26 still based on constant currency, and how is the growth expected to be distributed throughout the year?
A: Yes, the guidance for double-digit growth is based on constant currency, using Q4 FY25 rates. Growth is expected to be more back-ended, with improvements anticipated in H2 as the business environment stabilizes and large deals ramp up. (Rajeev Gupta, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
