L&T Tech banks on large deals, sustainability to drive growth in Q2

Mid-cap Indian IT firm L&T Technology Services Ltd (LTTS), the IT arm of Larsen & Toubro, announced its financial results for the second quarter of the fiscal year 2025 (Q2FY25) on Wednesday. The company posted revenue of ₹2,572.9 crore, a 4.5 per cent increase quarter-on-quarter (QoQ) and an 8 per cent year-on-year (YoY) growth. LTTS attributed this growth to large digital transformation deals and a strong focus on mobility, hi-tech, and sustainability.
 
Net profit for the period stood at ₹319.6 crore, showing a YoY growth of 1.3 per cent, with an EBIT margin reported at 15.1 per cent. The board declared an interim dividend of ₹17 per share, with a record date of 25 October 2024, in recognition of its performance.
 
During the quarter, LTTS secured two $20 million and four $10 million TCV deals, in addition to winning two significant empanelment agreements in Sustainability.
 
Amit Chadha, CEO & Managing Director of L&T Technology Services Limited, stated, “We had strong sequential growth of 4 per cent in Q2, led by Sustainability at 6.5 per cent, driven by earlier large deals and empanelment agreements. Mobility also showed strong growth at 5 per cent, propelled by our unique story on SDV and hybridisation.” 

“We are experiencing an uptick in artificial intelligence (AI)-led deal conversations, and our portfolio of AI solutions & accelerators is helping us win deals in our focus areas across segments. We have filed a total of 165 patents in AI till date.”
 
The company said in August that it is aiming to reach $3 billion in revenue across segments, including mobility, sustainability, and technology, with each segment targeting $1 billion.

Chadha emphasized that this growth aligns with the company's broader strategy, with each segment currently generating 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%,” he said.
 
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.  For example, it established a digital twin centre of excellence (CoE) jointly with computational intelligence firm Altair that will deliver digital twin capabilities to customers working across sectors such as mobility, hi-tech, and sustainability segments.
 
The CoE will offer artificial intelligence-powered engineering for products, systems, and processes; innovation labs for simulating new use cases; predictive maintenance; and rapid product development to reduce cycle time for physical prototyping, along with hands-on training.

The company’s intellectual property portfolio also saw expansion, with a total of 1,394 patents at the end of the quarter. Of these, 877 were co-authored with customers, and 517 were filed independently by LTTS. A notable focus area for LTTS has been AI, with the company having filed 165 AI-related patents to date, reflecting its increasing investments in AI-driven innovation.
 
In Q2, LTTS saw a small growth in its workforce, with employee strength rising to 23,698 by the end of Q2FY25 from 23,577 in Q1. The company reaffirmed its FY25 guidance of 8-10 per cent revenue growth in constant currency and a medium-term outlook of $2 billion revenue with an EBIT margin of 17-18 per cent.
 
Chadha said, “With our pipeline comprising larger-sized deals involving consolidation as well as advanced technology-led transformation, we are confident about the vision we set for ourselves and our medium-term outlook of $2 billion revenue with an EBIT margin of 17-18 per cent.”
 
IT services companies Tata Consultancy Services (TCS) and HCL Technologies also announced their Q2 FY25 financial results, highlighting growth from digital transformation contracts driven by investments in AI, cybersecurity, and cloud services.