We Have Already Extended 1,200 Job Offers For FY25: LTTS CEO Amit Chadha

L&T Technology Services (LTTS) reported revenue and net profit in line with expectations for the third quarter, albeit with slower income growth in Q3 FY24. As per the company’s Q3 report on Tuesday, the revenue increased by 1.5 per cent over the preceding three months, reaching Rs 2,421.8 crore in the quarter ending December. This figure falls slightly below the consensus estimate of analysts tracked by Bloomberg, which projected a revenue of Rs 2,451.03 crore. Nonetheless, the net profit growth of 13.3 per cent in the December quarter, totaling Rs 336.2 crore, surpassed expectations. 

LTTS CEO and MD, Amit Chadha, spoke with BW Businessworld's Rohit Chintapali to analyse the Q3 performance and outline the company's trajectory in the upcoming quarters. Excerpts:

Given its traditionally subdued nature, what specific impacts have you observed in the quarterly results during the December quarter?

We budget lesser number of working days. So, I'm pleased to say all the five verticals in the company grew sequentially for the second quarter in a row. This trend not only dispels the notion of isolated pockets of growth but indicates the robust advancement of each distinct vertical. Noteworthy highlights include the 2.4 per cent growth in the previously languishing Medical vertical, while Transport and Telecom both achieved commendable 1 per cent growth. Additionally, Europe and industrial products reached a significant milestone with a USD 200 million annualised run rate. In terms of order bookings, we secured six deals surpassing the USD 10 million threshold in the automotive sector, including a notable USD 40 million deal and a USD 20 million deal, along with two strategic partnerships—one with bp and the other with a prominent US Auto OEM in the software-defined space. One of the signed deals pertains to the critical domain of cybersecurity. Deal pipeline is also higher than what it was last year, same time, as well as quarter-on-quarter.

Slowdown in decision-making during the last quarter was part of your quarterly results commentary. Could you provide your insights on the current trajectory of deal decision-making and whether you anticipate an acceleration at this point?

Decisions are taking time and there is no going back on that. It is taking double the number of meetings to be able to do it right in terms of deals. We just have to learn how to work with it. However, we are seeing CY24 spends to be slightly higher and in-line with CY23. And I do see some green shoots as we move forward.

Would you say these “green shoots” are one of the reasons you have retained your 17.5-18.5 per cent guidance after trimming it in Q2? What gives you the confidence on the guidance front?

It hinges on a couple of key factors. Firstly, our ongoing success in securing deals has instilled confidence in our ability to capitalise on these agreements and others in the pipeline, enabling us to sustain positive momentum. However, acknowledging the work ahead in the current quarter, we remain committed to addressing challenges and optimising our performance within the specified range.

Could you elaborate on the specific nature of deals LTTS is currently exploring?

There are two or three key aspects to highlight. Firstly, LTTS is directing its focus towards software-defined vehicles in the automotive and commercial vehicle sectors, along with connected mobility. Secondly, our emphasis lies in value engineering and bolstering supply chain resilience within industrial products. Thirdly, in the realm of telecom and Hi-tech, our primary focus centres on AI stack development. Additionally, our attention extends to plant modernisation, turnarounds, and plant engineering, coupled with a dedicated focus on AI and machine learning in the domain of medical devices. 

The revenue in the transportation and industrial verticals has seen a decrease compared to Q3 FY23, while telecom and Hi-tech have exhibited an uptick. Simultaneously, regarding geographical distribution, the numbers indicate a growing significance for India. Could you provide insights into the factors influencing these trends and the strategic considerations behind them?

There are two key aspects to consider. Firstly, as we communicated earlier, our commitment was to grow smartly and responsibly, a commitment that is reflected in our sustained margins despite the growth in India. This underscores our ability to cultivate responsible growth both domestically and internationally, contributing to enhanced margins. Profits have shown a significant year-on-year increase, and we have also witnessed growth on a quarter-on-quarter basis. Looking ahead to the next couple of quarters, I anticipate transportation returning to its regular growth trajectory, discounting the current quarter's 1 per cent figure influenced by factors like the number of working days. Plant engineering is expected to maintain a growth trajectory similar to that seen in Q2, while hi-tech is projected to grow once again. Industrial growth may exhibit a slower pace, but positive growth is anticipated, and the medical sector is poised to continue its upward trajectory. 

You have previously discussed plans to hire around 2,000 individuals in FY24, with 1,000 expected to join in H2 FY24. I am keen to gain insights into the progress of this hiring initiative. Also, what is the outlook for hiring moving forward?

We have extended job offers to around 2000 individuals, with the final group expected to join us in January, February and March. This fulfills the commitments we made for this fiscal year. Looking ahead, we have already extended 1,200 offers for the next fiscal year and our active hiring initiatives remain ongoing as we progress further.

Also Read: L&T Technology Services Reports Revenue Increase At Rs 2421.8 Cr By 12% YoY