L&T Technology Services sees auto, healthcare driving growth in coming quarters

LTTS share price, ltts deals, ltts quarterly results, l&t technology services ceo, L&T Technology Services, Amit Chadha

Pune: L&T Technology Services Ltd, the engineering services arm of the Larsen & Toubro Group, expects opportunities in sectors such as healthcare and automobiles to drive growth in the coming quarters, chief executive officer Amit Chadha said.

The company reported revenue of Rs 1,518.4 crore and profit of Rs 216.2 crore for the quarter to June 30, up 17.3% and 84.3% year-on-year respectively.

Chadha said the business sentiment is back to pre-pandemic levels in key markets. In North America, the company’s biggest market, business sentiment and decision-making are back to near normal, he said.

In Europe, while countries like Germany are almost at pre-pandemic levels, decision-making is still slow in countries such as the United Kingdom and Sweden, and the situation has yet to get back to normal in Japan as well, he said.

“Among the sectors, there is a lot of buzz around electric, connected and autonomous vehicles, in that order. We’re also seeing people talk about cybersecurity,” said Chadha.

Other areas where the company sees demand is discrete manufacturing and healthcare and medical products, where deal activity is expected to pick up in the next few quarters.

“In oil and gas, there are very interesting transformations happening with a lot of companies moving to more green energy. There’s a lot of M&A (mergers and acquisitions) and they themselves are trying to change their output from gasoline and fuel, and there’s a lot happening there,” said Chadha.

L&T Technology Services won two $25-million and six $10-million deals in the June quarter and expects this momentum to continue. It improved its revenue growth guidance to 15-17% for 2021-22 from 13-15% earlier.

“The company is seeing increasing traction in areas like EV and e-powertrain and AD-ADAS vs pre-pandemic leading to better quality of revenue and margins. The deal opportunity across verticals continues to be a fair mix of large and small deals,” Nitin Padmanabhan, lead analyst-IT and telecom, Investec Capital Services (India), said in a note.

Chadha said the ER&D sector has the potential to grow rapidly in India, the way IT services did, and is engaged with industry and government bodies in trying to boost regulatory support. “Clients are looking at India as a destination more than China. The resilience shown by the Indian engineers through this Covid-19 period and the way Indian IT and R&D came across with not a single data leak, has created a very nice impression,” he said.

The pandemic resulted in more work being done offshore and there is potential to increase this further, said Chadha. “I do believe that a little bit more offshoring can increase. Remote working will continue in the next year and with the kind of resilience that India showed through this period, I believe offshoring is here to stay, not a complete switch but between 3-5%.”

The company plans to bring on board about 1,600 freshers this year and will continue to hire in key markets such as the US, UK and Japan.

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