L&T Technology Services (LTTS), a subsidiary of Larsen and Toubro (L&T), is seeing some concern in the hi-tech segment, while the overall outlook across sectors for the remaining two quarters of the fiscal is good.
In an interaction with FE, LTTS CEO and MD Amit Chadha said, “We expect spending in electric, autonomous and connected vehicle (EACV), digital manufacturing and in energy transition to continue, while the medical sector has always been conservative. However, there is a bit of caution in hi-tech for sure. We are seeing this in our results also, as hi-tech was a bit subdued,”
The third quarter (ending December) will be “slightly muted” due to the holidays both in India and globally, and furloughs with employees asking for unpaid leave. “But we expect the fourth quarter to be strong,” he said.
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Commenting on the funding slowdown in the startup sector, Chadha said “the era of free money is over”. New businesses and startups will face challenges in raising funds, but that wouldn’t be the case for companies with well-defined service lines and large customers.
Chadha also said LTTS is not seeing any slowdown in spending from the clients’ end.
His comments come amid fears of an impending global recession, which according to many industry experts is likely to result in lower customer spending.
For the second quarter ended September, LTTS posted a consolidated net profit of `283.2 crore, a 2.98% rise from `275 crore recorded during the first quarter ended June 30. On a year-on-year basis, the net profit rose 23% from `230.8 crore recorded during the same period a year ago.
During the reporting quarter, LTTS’ revenue rose 6.48% to `₹1,995.1 crore from `1,873.7 crore in the June quarter and 24.09% from `1,607.7 crore recorded during the year-ago quarter.
The company’s earnings beat consensus estimates of Bloomberg analysts, who were expecting the firm to post a net profit of `273.60 crore on revenue of `1,966.70 crore for the reporting quarter.
“The rise in net profit and revenue came despite the increments we provided to our staff. Further, we have achieved a $1 billion run rate during the quarter on a constant currency basis, which was the result of tightening operations, while we had a good quarter in deals wins, especially in Europe,” Chadha said.
The firm also announced an interim dividend of ₹15 per share. LTTS’s attrition during the quarter rose to 24.1% from 23.2% recorded in June quarter, while it added 500 freshers during the quarter under review.
“Our net addition was small because we have improved our utilisation and reduced non-billable headcount,” he added.