LTTS reports 4% drop in revenue as Covid-19 shuts several factories across the globe

Mid-size information technology (IT) services firm Larsen and Toubro Technology Services (LTTS) has reported a 4% year-on-year decline in revenue to Rs 1,295 crore for the June quarter. 

The Vadodara and Bengaluru-based company also reported a 42% year-on-year dip in net profits to Rs 117 crore for the first quarter of the financial year 2020-21.

The engineering and manufacturing focussed IT firm said that the pandemic had forced many industries to operate at limited capacity, affecting its results. The subsidiary of Mumbai-based engineering conglomerate Larsen and Toubro (L&T) said that its telecom and high-tech, and medical verticals did well despite several challenges.

“Q1 was a challenging quarter as expected. Still, we had a good performance in two of our segments, while large deals wins continued. We see a path for recovery backed by good order bookings and a healthy pipeline. We expect both revenue and operating margin to show sequential improvement over the remaining quarters of the current fiscal,” Keshab Panda, CEO and managing director of LTTS, said. 

During the quarter, LTTS won nine multi-million dollar deals across all major industry segments, including a deal with a total contract value (TCV) of more than $30 million and two deals with TCV of more than $15 million, it said. On a year-on-year basis, LTTS said it increased its clients in the over $10 million category by five and the $1 million-plus category by three.

The company said it generated strong free cash flow during the quarter and was in a healthy cash position for future challenges as well. Its operating margin stood at 12.15% during the quarter -- much lower than large IT firms, which reported margins north of 20%.

Separately, LTTS also acquired a 100% stake in telecom solutions provider Orchestra Technology to bolster its capabilities in the next-generation digital systems for 5G and internet of things (IoT) networks. The Richardson, Texas-based firm will help LTTS provide solutions in network engineering, enterprise mobility and modernisation, it said in a statement.

The company was working with its customers to redraw their business plans, improve operating efficiency, fine tune sourcing and production plans, and prepare for faster go-to-market, Panda said.

The L&T group runs two more IT services firms -- L&T Infotech (LTI) and Mindtree. 

Bengaluru-based Mindtree, which it bought last year, saw better-than-expected results during the June quarter. It reported a 130% increase in quarterly profit on the back of a healthy order book.

On the other hand, LTI posted a net profit of Rs 416 crore, a year-on-year growth of 17% during the June quarter of FY21.