LTTS aims at $3 bn revenue with a focus on mobility, sustainability, and tech 

Four months after restructuring its verticals into mobility, sustainability, and technology, L&T Technology Services (LTTS), the IT arm of Larsen & Toubro, said that it is targeting $3 billion in revenue across these segments, with each aiming for $1 billion. 

CEO Amit Chadha highlighted that this growth aligns with the company's broader strategy. At present, each segment currently generates around $400 million. “Our vision is to become a top-five global engineering research and development (ER&D) player, achieving $3 billion in revenue while maintaining a client-centric approach and aspiring to reach 2,500 patents in the medium term, along with an EBIT of 17-18%,” Chadha said. 

Ahead of LTTS’ Investor and Analyst Day, he noted a medium-term goal of $2 billion in revenue, though no timeline was specified, he expressed confidence in reaching it.

To facilitate growth, LTTS has decentralised decision-making, delegating about 50% of decisions to segment leaders. “This restructuring allows for quicker strategic choices,” Chadha explained. He added that the company aims for revenue to grow from approximately $750 million with 14% EBIT to nearly 18.9% EBIT, excluding Smart World initiatives, positioning itself at about $1.2 billion in annual revenue.

In addition to mobility and sustainability, LTTS is advancing in artificial intelligence (AI), cybersecurity, and Software-Defined Everything, collaborating with semiconductor manufacturers on advanced technologies, including advanced chips.

While acknowledging opportunities in international markets like the US, Europe, Japan, and the Middle East, Chadha mentioned the unique pace of government decision-making in India as a challenge. 

The company reported a net profit of ₹313.6 crore for the quarter ending June 2024, up 0.8% year-on-year, with a 7% YoY revenue increase to ₹2,461.9 crore. As of Q1 FY25, LTTS held 1,343 patents, of which 853 are co-authored with customers. The headcount was 23,577 as of June 2024.

During the quarter, LTTS also secured five deals, including two worth $30 million and two at $15 million each. Brokerage firm Emkay notes that LTTS' deal pipeline has doubled year-on-year, though decision-making remains sluggish. Nonetheless, it said, favourable US economic conditions are likely to be a positive sign for the company.

Kotak Institutional Equities also sees LTTS’ new structure that aims for $1 billion in revenue with improved margins as a positive step for sustainable growth. The strategy, while ambitious, is deemed essential, though LTTS has seen only moderate progress in expanding accounts in the $20-30 million range compared to Indian ERD competitors with accounts exceeding $75 million, it said.