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Eagle’s Eye view: *L&T Technology Services (LTTS)* Q1 FY25 results:
### *Company Overview:*
L&T Technology Services Limited (LTTS) is a subsidiary of Larsen & Toubro Limited, focused on Engineering and R&D (ER&D) services. It offers consultancy, design, development, and testing services across the product and process development life cycle. LTTS serves 69 Fortune 500 companies and 57 of the world's top ER&D companies in industrial products, medical devices, transportation, telecom & hi-tech, and process industries. As of June 30, 2024, LTTS employs over 23,550 people globally.
### *Q1 FY25 Highlights:*
- **Revenue**: ₹24,619 million, up 7% YoY.
- **Net Profit**: ₹3,136 million, up 0.8% YoY.
- **EBIT Margin**: 15.6%.
- **USD Revenue**: $295 million, up 6% YoY in constant currency.
Revenue was muted since last year and that continues for Q1_fy25 also. Profits are down.
### *Financial Performance:*
- **Consolidated Sales**: ₹24,619 million, up from ₹23,014 million YoY.
- **Profit**: ₹3,136 million, up from ₹3,121 million YoY.
- **Constant Currency Growth**: 6.1% YoY.
- **Segmental Growth**:
- **Mobility**: Revenue ₹8,660 million, grew 13.4% YoY.
- **Sustainability**: Revenue ₹7,401 million, grew 0.5% YoY.
- **Hi-Tech**: Revenue ₹8,558 million, grew 2.5% YoY.
- **Regional Growth**:
- **North America**: 52.9% of total revenue.
- **Europe**: 18.1% of total revenue, grew 23.7% YoY.
- **India**: 22.0% of total revenue, grew 12.2% YoY.
### Profit Margin and Financial Ratios:
- **EBIT Margin**: 15.6%.
- **Net Income Margin**: 12.7%.
- **Gross Margin**: 29.3%.
- **EBITDA Margin**: 18.5%.
- **Earnings Per Share**:
- **Basic**: ₹29.65.
- **Diluted**: ₹29.57.
### Employee Metrics:
- **Total Employees**: 23,577.
- **Billable Employees**: 22,120.
- **Voluntary Attrition**: 14.8%.
### Key Wins and Recognitions:
- Secured multiple multi-million-dollar projects, including deals in automotive, technology, aerospace, and defense sectors.
- Recognized as a Great Place to Work in the US and Poland.
- Won the FICCI Smart Urban Innovation Awards for the Patna Smart City Project.
- Rated as leaders in the Connected Product Engineering Services PEAK Matrix® Assessment 2024 in Embedded Engineering by Everest Group.
### Peer Comparison:
Comparing LTTS with other companies in the same industry like TCS, Infosys, and Wipro:
- **Revenue Growth**: LTTS's revenue growth of 7% YoY compares favorably with its peers, indicating strong performance in its market segments.
- **Profit Margins**: LTTS's EBIT and Net Income margins are competitive, showcasing efficient operations and cost management.
### Industry Outlook:
The Engineering and R&D (ER&D) services industry is expected to grow due to increased demand for digital transformation, automation, and sustainability solutions. LTTS's investments in AI, digital transformation, and sustainability positions it well to capitalize on these trends.
### Future Outlook:
LTTS aims for 8-10% revenue growth in constant currency for FY25, with a target to reach a $1.5 billion revenue run rate. The company is focusing on accelerating growth through strategic investments in AI, digital transformation, and expanding its footprint in key verticals like mobility, sustainability, and hi-tech.
### Conclusion:
LTTS has demonstrated average performance in Q1 FY25 with average revenue growth. Its strategic initiatives in AI and digital transformation, combined with a strong pipeline of multi-million-dollar deals, position it well for future growth. The company's focus on innovation and sustainability further strengthens its market position.
