InvestorQ : Why did the L&T Technology results disappoint the markets?
shrinidhi Rajan made post

Why did the L&T Technology results disappoint the markets?

5 months ago

L&T Technology Services saw pressure on the top line and also on the bottom line. The Q3 PAT was down 9.2% yoy at Rs186.9cr while total sales revenues were down 1.56% yoy in Dec-20 quarter at Rs.1401 crore. Revenues were lower from the Transportation and Plant Engineering verticals while revenues grew in the medical devices and telecom verticals.

Consolidated operating profits for the Dec-20 quarter were down 10.83% at Rs.213 crore. This was on account of higher manpower expenses, which was a challenge for most of the IT companies in India in this quarter. This was partially compensated by better control on other expenses. OPM contracted from 16.80% in the Dec-19 quarter to 15.22% in Dec-20 quarter.

PAT margins were down from 14.46% in Dec-19 to 13.34% in Dec-20. In dollar terms, LTTS reported sequential growth of 6.8% in revenues and 12.4% in dollar profits. It has expanded its portfolio of large orders winning 7 contracts of value above $10 million each. Transport vertical still dominates with 30% revenues followed by Telecom at 23% and industrial products at 19.3%.

North America is obviously the biggest market, as in the case of most IT companies, giving 61.2% of total revenues in the latest Dec-20 quarter. The US was followed by Europe giving 16.1% of the revenues while India accounted for 13.9%. With rising visa and H1-B pressures, the ratio of offshore to onsite has also improved to 57:43.