L&T Tech Services earnings: Cost optimisation measures aided all-time high EBIT, says management

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L&T Tech Services’ stock surged over 13 percent on Thursday on the back of a strong set of numbers for the quarter. It is currently trading at around Rs 3,372 on the NSE. The engineering services arm of the Larsen and Toubro Group, on Wednesday, reported an 84 percent jump in its net profit to Rs 216.2 crore for the quarter ended June 30, 2021. Its revenue from operations grew 17 percent to Rs 1,518 crore in the first quarter of FY22 from Rs 1,294.7 crore in the year-ago period. The company has also raised its FY22 guidance to 15-17 percent growth from 13-15 percent earlier.

L&T Tech Services’ stock surged over 13 percent on Thursday on the back of a strong set of numbers for the quarter. It is currently trading at around Rs 3,372 on the NSE. The engineering services arm of the Larsen and Toubro Group, on Wednesday, reported an 84 percent jump in its net profit to Rs 216.2 crore for the quarter ended June 30, 2021. Its revenue from operations grew 17 percent to Rs 1,518 crore in the first quarter of FY22 from Rs 1,294.7 crore in the year-ago period. The company has also raised its FY22 guidance to 15-17 percent growth from 13-15 percent earlier.
In an interview with CNBC-TV18, Amit Chadha, MD & CEO of L&T Tech Services, said, “It is a good set of numbers, 4.2 percent sequentially as well as EBIT at 17. 3 percent, which has been an all-time high for us and from a quantum standard point, Rs 216 crore. “
On margins, he said, “We wanted to be in that 17 percent corridor for EBIT and we have delivered that. It is a result of a number of factors, taking into account that we have setup a training institute, Global Training Academy for the company and that has helped us in terms of reskilling, re-training a lot of our employees. Secondly, we have continuously taken in freshers in the last three quarters so we expect to take about 1,500 freshers into the fiscal year so that has played a part. There are cost optimisation measures that are there in the company that we have gone forward with.”
He added, “Demand in the US and Europe is almost back to pre-COVID levels and we see these specifically in the verticals we operate in so, more money is being spent on developing electric vehicles further. We are seeing demand in the digital factory, digital manufacturing as well as digital products in the industrial product segment. We do see demand coming up now in the 5G and this is yet to play out. We are seeing a lot of conversation around sustainability and green energy, etc. Finally, medical technologies as well, we are seeing people spending, elective surgeries are coming back slowly. They had been stopped because of COVID, so all-in-all, we do think that growth is back.”
On guidance, Chadha said, “There is still a bit of uncertainty relating to COVID. We are fairly certain on what we have declared as the guidance now. As things change, we will continue to update.”
On attrition, Chadha said, “Last year was not a good year, this year we have done increments for our junior to mid-level talent effective April 1, seniors are getting increment from July 1. We have other retention measures that we have put in place, you can see our attrition has gone up, we are concerned about it and we are working towards making sure that we stay within certain boundaries in this one.”
On deal wins, he said, “We continue to stay focused on ideation, creating a pipeline and then closing. There were two wins that we had that were $25 million plus this quarter, there were another four that were $10 million plus, these are in our strategic investment areas.”
For full management commentary, watch the video.

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CompanyPriceChng%Chng
Tata Motors295.55 -7.00 -2.31
Grasim1,549.50 -32.55 -2.06
Larsen1,611.75 -30.40 -1.85
Adani Ports680.05 -11.75 -1.70
Tech Mahindra1,131.00 -17.60 -1.53
CompanyPriceChng%Chng
Larsen1,612.00 -29.55 -1.80
HUL2,359.25 -19.40 -0.82
Reliance2,105.20 -15.80 -0.74
Asian Paints3,083.20 -21.25 -0.68
NTPC118.50 -0.80 -0.67

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