FY23 - Q2 - Result looks good.
4 Likes
2 Likes
Acquisition update
January 12, 2022: L&T Technology Services Limited (BSE: 540115, NSE: LTTS), a global leading pure-play engineering services company, today announced that it has agreed to acquire the Smart World & Communication (SWC) Business of L&T, enabling LTTS to combine synergies and take offerings in Next-Gen Communications, Sustainable Spaces and Cybersecurity to the global market.
1 Like
Concall Summary
2 Likes
If true, it doesn’t reflect well at all on the company. And this settlement could have 7-8% impact on FY23 PAT (per analysts).
Nothing alarming other than the impact on FY23 PAT. Ask anyone working in IT and they will tell you that all IT companies do the same trick. Most of the time people travel on B1/B2 for the purpose of Training, Knowledge transfer but they work from there after those “Trainings” :). If you look back, you will find many such news of Infy, TCS etc setting such visa abuses.
3 Likes
Company has confirmed that this amount has been accounted for in the previous quarters itself and wont have any adverse impact on Q4FY23 and FY23 results.
2 Likes
These 2 companies result confirm that ER&D space companies are able to buck trend compared to pure IT services companies
3 Likes
Company is doing 20% growth every quarter since last 7-8 quarters, will do 20%+ USD in FY24 as well, FY25 they will hit 1.5B. In tough macro conditions if they can deliver growth, wonder what can happen if the skies get clear someday 
Reverse DCF bakes in 10-12% growth with terminal multiple of 15. This has all the characteristics of a compounder business which can grow 18-20% CAGR in next 5 years, but still available at 30-35 PE.
Disc: Invested
17 Likes
LTTS is a well diversified play. One can take a basket approach and include LTTS along with some high beta names in this sub segment of tech plays.
2 Likes
Its definitely a large deal for LTTS and shows that SWC capabilities have started bearing fruits in cybersecurity. However, the key thing to watch out will be how they are able to leverage these kind of big wins to take the offerings to their global clients. Legacy SWC always had government contracts in India and that was one of the main reasons for their low margins and higher DSO days.
There is a huge demand in smart cities and cybersecurity globally in developed countries. Amit Chaddha (LTTS CEO) recently wrote in an article how smart cities and software defined vehicles can be integrated. If leveraged well, such deals can be big revenue triggers for future pipeline.
Disc - Invested from lower levels.
3 Likes
Based On above Outlook by Management , On one hand they are guiding for 8-10% CC growth for fy 25 on the other hand they have aspirations to touch 1.5 billion usd in reveue that a 50% increase from present sales. How are they going to achieve it if they are guiding for 8-10% CC growth.
1 Like
Maybe through acquisitions
You have only highlighted certain part of concall. If you are following the company, they have always maintained that their 1.5 B USD aspiration has inorganic growth backed in as well. Recently they absorbed around 300 engineers from Forvia as part of a 45M Euro deal. Now they are not looking for any auto related acquisitions in Europe. The target is medtech in US now. Yes 1.5B USD is ambitious but not completely ruled out. Problem with LTTS off late is they are taking two steps forward and one step backward. They were doing well on margin and revenue front before they acquired SWC. They had to compromise on margin due to that. Now due to reorganizing in three verticals, they are again compromising on margin and you will see EBIT margin mostly going below 16% in first two quarters of FY25. So they have compromised on margins for growth in last two years which market has not taken kindly. In fact, in Q4FY24 they did growth 5.1 QoQ in CC which is really good but margin guidance did not go well with market and stock has been on downturn since then.
8 Likes