When Larsen & Toubro Infotech (LTI) listed on the stock exchanges in Mumbai in July 2016, it wasn’t the most auspicious of beginnings for Sanjay Jalona, who had quit Infosys to take over as CEO and MD of the company the previous year. The stock ended lower on debut, even though the issue had been subscribed 11 times over.
Reports from the time suggest that the fall had more to do with the overall lackluster performance of the IT services sector then, and not anything specific to LTI. Not long after, Jalona proved that right, leading the company to the biggest order win in its history at the time—a $150 million contract to build much of the IT needed by a South African bank that was separating from its UK-based parent. At the time, LTI was not far from a billion dollars in annual revenue.
That large contract wasn’t a one-off either. The company has continued to win big contracts since then. During the three months ended December 31, 2020, LTI won two large contracts, including an enhanced partnership with Abu Dhabi-based cloud services provider Injazat, which could bring in $204 million in revenue over six years, and a net increase of $74 million over a five-year period from an existing global 500 customer.
“I like being an underdog,” says Jalona, speaking over a video call from his home in New Jersey, US. “I might not have the balance sheet to bid for a billion-dollar deal, but I have the capability to bid for a $200-300 million deal because now we are a $1.6 billion revenue company.”
Over the last four years, investors have bought into the LTI promise to the extent that the stock has become the most expensive among India’s IT services companies. It almost tripled from its debut to nearly ₹2,000 by September 2018. Then, as it became apparent that the world would see a strong ‘upcycle’ of technology spending in the post-Covid-19 recovery, the LTI stock more than doubled from its Covid-19 low on April 3, 2020, to ₹4,287.85 on January 15, 2021.
LTI’s recent inclusion in the Morgan Stanley Capital International’s index for Indian equities also helped, according to media reports, citing analysts at brokerages. By revenue, LTI is about a third of Tech Mahindra, India’s fifth-biggest IT services provider, but by market cap it’s more than threequarters the value of its bigger rival.
Pretty much every large contract that LTI wins today is in competition with bigger companies, Jalona says. One of the reasons is his personal commitment to do everything possible for the customer. For example, recalls CMO Peeyush Dubey, the CIO of the South African bank decided in LTI's favour after Jalona answered his midnight call when the CIO couldn’t reach anyone at a larger rival of LTI that was also on the final shortlist for the contract.
After 15 years at Infosys, where he built two billion-dollar units, Jalona, 51, quit leading LTI in August 2015. He had met L&T Group’s Chairman AM Naik and learned about his ambitions for the IT subsidiary. “I was not looking for a job,” Jalona says. He was attracted, however, by the chance to leave a legacy and transform an operation that had started out as the IT unit of the better-known engineering group into a world-class tech services provider in its own right.
At the time of the IPO, when a fund house called LTI a “me-too company… don’t subscribe” in a report, “it really hurt,” Jalona recalls. Instead, he unearthed a hidden gem, and after its 2016 listing, rebranded the business as LTI to give it an identity of its own, and grew it faster than the industry, year after year. “The same fund house became the biggest proponent of ours in three years.” Now, aided by the world’s transition to cloud computing and the accelerated investments in technology because of the pandemic, Jalona is pushing LTI, with its 34,000 software engineers, to punch above its weight, and win.
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