Margin pressure clouds L&T Technology's near-term outlook

The Street wasn't upbeat with the second quarter results of L&T Technology Services (LTTS) and its shares dropped 3 per cent on Thursday. It reported an almost flat 3 per cent rise in consolidated net profit year-on-year (Y-o-Y).

- DEVANGSHU DATTA

Analysts' opinions are divided. LTTS reported revenue of $307 million, up 3.4 per cent quarter-on-quarter (Q-o-Q) in constant currency (CC) terms. The Sustainability vertical saw 6.5 per cent Q-o-Q growth, supported by large deals bagged earlier. The Mobility vertical hit 5 per cent growth.

Management maintains FY25 guidance of 8-10 per cent revenue growth in CC, which implies a steep growth rate of 4.5-7 per cent growth per quarter in H2FY25. The earnings before interest and tax (Ebit) margin was 15.1 per cent, a miss with decline of 50 basis points, but the management reiterated guidance of 16 per cent margin for FY25 despite wage hikes in Q3FY25. Large deal wins were lower but the company expects to close a number of $25-100 million deals in H2FY25. In the medium-term, LTTS is targeting $2 billion revenue outlook with Ebit margin of 17-18 per cent.