Engineering services company L&T Technology Services (LTTS) Ltd on Wednesday reported an 18 percent year-on-year jump in net profit at Rs 309.6 crore for the fourth quarter that ended March 31, 2023.
In the corresponding quarter last year, the company posted a net profit of Rs 262 crore. CNBC-TV18 Polls had predicted a profit of Rs 309.5 crore for the quarter under review.
In the March quarter, total revenue stood at Rs 2,096.2 crore during the period under review, up 19 percent against Rs 1,756.1 crore in the corresponding period of the preceding fiscal. CNBC-TV18 Polls had predicted revenue of Rs 2,088 crore for the quarter under review.
The company's earnings before interest and tax (EBIT) increased 2.6 percent quarter-on-quarter to Rs 392.7 crore from Rs 382.9 crore. The EBIT margin stood was flat at 18.7 percent in the March quarter.
In dollar terms, the company's revenue stood at $255.1 million in March 2023 quarter against $248 million in the December quarter, a rise of 2.9 percent quarter-on-quarter
During the quarter, LTTS won a $40-million deal and three $10-million plus TCV deals. Also, LTTS’ employee strength stood at 22,233 in the March quarter, according to the regulatory exchange filing by the company to the stock exchanges.
At the end of the fourth quarter, the patents portfolio of the company stood at 1,090, out of which 727 are co-authored with its customers, and the rest are filed by LTTS.
Amit Chadha, CEO, and Managing Director, said FY23 was a landmark year for the company as it crossed $1 billion in revenue run rate and Rs 1,000 crore in annual profits.
Our EBIT margin was the highest ever at 18.5 percent driven by a strong focus on building a robust and sustainable operating model. The combination of steady growth and expanding operating margin has led to an 18 percent CAGR in profits over the last 5 years, Chadha said.
The board of directors recommended a final dividend of 1,500 percent i.e. Rs 30 per equity share of face value of Rs 2 each, subject to approval of the shareholders of the company.
The results came after the close of the market hours. Shares of L&T Technology Services Ltd ended at Rs 3,439.30, up by Rs 14.25, or 0.42 percent on the BSE.
While speaking exclusively in an interview with CNBC-TV18 about US and Europe business, Amit Chadha, CEO and MD of L&T Technology Services said, “We do see spending in the US and Europe towards energy transition and electrification. We do see spending in digital transformation to be continuing. The market is supposed to go from about USD 800 billion to USD 1.4 trillion by 2026 led by cyber security, AI, hyper-automation, enhanced needs of connectivity rolling out, better computation as well as cloud adoption.”
On the margin, he said, “With all the expenses put together, we have guided in the 17 percent range and that is where we will be for the year (FY24) and the quarter, as we move forward, and we have an aspiration to get back to 18 percent levels in the first half of FY26.”
L&T Technology Services recently caught the attention of two major research firms, CLSA and Morgan Stanley, who have both released their own reports on the company.
CLSA upgraded L&T Tech's rating from "sell" to "underperform," while also raising the target price from Rs 3,250 to Rs 3,550 per share. The firm noted that Q4 performance was broadly in line with expectations, and highlighted the company's steady deal wins and better-than-expected revenue growth guidance for FY24. Additionally, CLSA pointed out that margin management has been efficient. However, the recent SWC acquisition was seen as a near-term overhang.
On the other hand, Morgan Stanley maintained an "underweight" rating on L&T Tech and set a target price of Rs 3,200 per share. The firm noted that Q4 performance was better than consensus estimates and highlighted the company's double-digit organic revenue growth guidance for FY24 as a sign of resilience. Despite positive management commentary, Morgan Stanley sees limited upside to consensus estimates and remains underweight due to moderating EBIT growth. Additionally, the dilution in free cash flow conversion resulting from the acquisition of SWC keeps the firm underweight.
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First Published: Apr 26, 2023 5:23 PM IST
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