Mid-tier IT company, L&T Technology Services has reported a net profit of Rs 1.9 bn, 5% lower than the corresponding quarter last year.
The company's revenues stood flat at Rs 14.4 bn, while dollar revenue was US$ 197.5 m.
On a sequential basis, its constant currency revenue grew 3.8%, missed analysts' estimates by 130-150 basis points (bps).
Revenues from digital and high-end technologies continued to grow at robust pace and stood at 52% of the total during the quarter.
The company also under-performed its peer Cyient's constant currency revenue growth of 4.7% in the March quarter.
Here's a table comparing L&T Technology's quarterly performance on key parameters.
(Rs m) | Q4FY21 | Q4FY20 | Q3FY21 | YoY (%) | QoQ (%) |
---|---|---|---|---|---|
Revenue | 14,405 | 14,466 | 14,007 | -0.4% | 2.8% |
Total expenses | 12,139 | 12,362 | 11,989 | -1.8% | 1.3% |
Profit before tax | 2,612 | 2,718 | 2,506 | -3.9% | 4.2% |
Tax | 659 | 655 | 637 | 0.6% | 3.5% |
Profit after tax | 1,953 | 2,063 | 1,869 | -5.3% | 4.5% |
During the quarter, L&T Technology won six deals with a total contract value of over US$ 10 m, including two deals of over US$ 25 m.
In a post-earnings conference call, the company's management said that going forward, its pipeline remains strong, however, deal closures are uncertain.
The company's management has attributed modest guidance to their increased caution due to the recent surge in Covid cases in India.
For the financial year 2021, the company reported a 19% decline in net profit at Rs 6.6 bn and 3% decline in revenues at Rs 54.5 bn.
US revenues were down 6.3% at US$ 737 m and EBIT margin was at 14.5%.
The company's board recommended a final dividend of Rs 14.50 per share.
Commenting on the performance, Amit Chadha, CEO and MD said the company is exiting FY21 on an optimistic note post three consecutive quarters of strong deal wins, as well as sequential revenue and operating margin improvement.
The company has given a revenue guidance of 13-15% for FY22.
Chadha said that the company will be able to maintain EBIT margin target of 17%. He added that attrition at 12% is the lowest in the industry.
But he is expecting attrition to pick up in Q1 due to seasonality.
The company will be hiring 1,200 freshers in FY22 and has given increments to junior and mid-level employees effective 1 April 2021.
At the end of the fourth quarter, the patents portfolio of L&T Technology Services stood at 650, out of which 485 are co-authored with its customers and the remaining 165 have been filed by the company.
L&T Technology today announced that the firm's board has re-appointed Mr. Narayanan Kumar as the Independent Director of the company for a further period of three years and seven months with effect from 15 July 2021, up to and including 14 January 2025.
This decision is subject to the approval of the shareholders.
We reached out to Richa Agarwal, senior research analyst and editor of the smallcap stock recommendation service, Hidden Treasure, for her view on the IT sector.
Here's what she has to say about investing in companies in the IT sector right now -
Reacting to its earnings, the stock tanked 8% on Tuesday.
The company's March quarter results failed to set Dalal-Street on fire even as shares of the company have gained over 115% in the past one year.
Presently, shares of L&T Technology are trading down by 0.2%.
IT stocks are trading on a positive note today with shares of NIIT and Oracle Financial Services witnessing most of the buying interest.
L&T Technology share price has touched a 52-week high of Rs 3,062 and a 52-week low of Rs 1,066.
Have a look at the chart below which compares the share price performance of L&T technology with the benchmark BSE Sensex over the last one year.
While Rs 100 invested in BSE Sensex a year back has turned out to be Rs 152, the same has turned out to be Rs 216 in L&T Technology.
The company currently trades at a P/E of 42, at a premium to TCS (37 times), Infosys (31 times) and Cyient (27 times).
L&T Technology Services (LTTS) is a listed subsidiary of Larsen & Toubro Limited focused on engineering and R&D (ER&D) services.
The company offer consultancy, design, development and testing services across the product and process development life cycle.
the company's customer base includes 69 Fortune 500 companies and 53 of the world's top ER&D companies, across industrial products, medical devices, transportation, telecom & hi-tech, and process industries.
L&T Technology Services has over 16,400 employees spread across 17 global design centers, 28 global sales offices, and 69 innovation labs as of 31 March 2021.
For a sector overview, you can read our IT sector report.
To know what's moving the Indian stock markets today, check out the most recent share market updates here.
Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.
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1 Responses to "L&T Technology Shares Fall After Q4 Results. What Should Investors Do?"
Santanu Saha
May 5, 2021Should we accumulate the stock for a time horizon of 5yrs?