L&T Tech Services Q1 net jumps 84%, updrades revenue growth guidance for FY22

L&T Technology Services (LTTS) on Wednesday reported an 84 per cent jump in its June quarter net at Rs 216.2 crore, largely on widening margins. The city-based company, the engineering and research and development services arm of the infra major L&T, had posted a net profit of Rs 117.2 crore in the year-ago period.

Its overall revenue increased by 19.42 per cent to Rs 1,562.6 crore for the reporting quarter, while the operating profit widened 5.20 per cent to 17.3 per cent, its highest ever. "Certain degree of normalcy has come back in the US and also Europe (which contribute over 80 per cent of revenues).

Decision making has come back. Japan and India will also eventually come back," its newly-inducted chief executive and managing director Amit Chadha told PTI.

Chadha said the company is now upping its revenue growth guidance to 15-17 per cent in FY22 as against the earlier 13-15 per cent because of the prospects that it sees, and is also more confident about the profit margins. He said it could widen the margins despite implementing wage hikes for junior and mid level employees from April, and added that the hikes for others will be implemented from July onwards, which should be seen as things getting back to normal.

The company could expand the margins because of levers like higher digitalization, he said, adding that the quantum of work done offshore has also increased to 58 per cent of the billing as against 50 per cent before the pandemic.

The company sees a headroom for increasing the offshore mix in billing to go up by another 1-2 percentage points, he added. It hired 300 freshers during the quarter, and is targeting to to do a total of up to 1,500 freshers during the fiscal year ending March 2022, he said.

The overall headcount at the end of June stood at 16,972 people. Chadha said LTTS offices in US, Israel, and Europe (excluding UK) are operational now, and added that by early 2022, it expects more normalcy with over 75 per cent of the staff across the globe working from offices. The proportion of people working from offices had touched 35-40 before the onset of the second wave of the pandemic in India.

There is also a possibility of increasing the office space within the country in the time ahead, Chadha said, adding that it opened a new facility in Mysore recently and has additional space in its Bengaluru and Vadodara.

The company has identified six focus areas from a future growth perspective in which it will be investing, including automated electric vehicles, 5G telecom, medical technologies, digital manufacturing, AI/ML and sustainability, he said, adding that the capital expenditure will remain within the 1-2 per cent of revenues band.

The company scrip closed 2.86 per cent up at Rs 2,910.25 on the BSE on Wednesday before the announcement of the earnings, as against gains of 0.25 per cent on the benchmark.