L and T Technology Services Q2 results

L&T Technology Services Q2 Results: ₹319.6 Crore Net Profit, ₹17 Interim Dividend

1. Overview of Financial Performance

L&T Technology Services (LTTS) reported a net profit of ₹319.6 crore for the quarter ended September 30, 2024 (Q2 FY25). This marks a 1.9% increase compared to the previous quarter and a 1.3% growth year-on-year (YoY). The company’s revenue for the period stood at ₹2,572.9 crore, a 4.5% rise quarter-on-quarter (QoQ) and 7.8% YoY.

2. Revenue in Dollar Terms

LTTS reported revenue in US dollar terms of $306.7 million, reflecting a 3.9% QoQ and 6.5% YoY growth. In constant currency terms, revenue increased by 3.4% QoQ and 6.3% YoY, showing steady growth in its international operations.

3. Profitability Margins

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): LTTS recorded EBITDA of ₹466 crore for Q2 FY25, an increase of 2.1% QoQ. However, it saw a 2% decline YoY.
• EBIT Margin: The company’s EBIT margin stood at 15.1%, down from 17.1% in Q2 FY24 and 15.6% in the previous quarter.
• EBITDA Margin: The EBITDA margin decreased to 18.1% from 19.9% in Q2 FY24 and 18.5% in Q1 FY25.

4. Interim Dividend

In addition to its financial performance, LTTS announced an interim dividend of ₹17 per share. The record date for determining eligible shareholders is set for October 25, 2024.

5. Key Observations

• Sequential Growth: The company posted steady sequential growth across revenue and profit, though margins have faced pressure.
• Margin Pressure: Both EBITDA and EBIT margins have contracted YoY due to higher operational costs and possibly a less favorable pricing environment.
• Dividend Announcement: The interim dividend reflects LTTS’s ongoing commitment to rewarding its shareholders despite the margin pressures.

Advantages and Disadvantages

Advantages:

1. Consistent Revenue Growth: LTTS reported robust revenue growth in both rupee and dollar terms, reflecting strong demand across its key markets and sectors.
2. Interim Dividend: The ₹17 per share interim dividend underscores the company’s commitment to shareholder returns and financial stability.
3. Global Performance: With a solid performance in constant currency and growth in US dollar terms, LTTS shows resilience in the face of a challenging global economic environment.

Disadvantages:

1. Margin Decline: Both EBITDA and EBIT margins have declined on a year-on-year basis, which could indicate rising operational costs, pricing pressure, or other inefficiencies.
2. Profit Growth Slowing: Despite a marginal increase in net profit sequentially and YoY, the growth rate is relatively low, reflecting possible challenges in boosting profitability amid fluctuating market conditions.

Conclusion

L&T Technology Services delivered stable growth in revenue and net profit during Q2 FY25, with sequential gains driven by robust international performance. However, the decline in EBITDA and EBIT margins may be a point of concern for investors, as it indicates some pressure on the company’s profitability. Despite this, the announcement of an interim dividend showcases the company’s confidence in its future prospects and commitment to shareholder returns. As LTTS continues to expand its global footprint, improving operational efficiency and addressing margin pressure will be critical for sustained growth.

FAQs

1. What is the net profit of L&T Technology Services in Q2 FY25?

1. • The net profit for Q2 FY25 was ₹319.6 crore, reflecting a 1.9% increase sequentially and a 1.3% YoY rise.

2. How much revenue did LTTS generate in Q2 FY25?

1. • LTTS generated a revenue of ₹2,572.9 crore, up 4.5% QoQ and 7.8% YoY.

3. What are the key margins for LTTS in Q2 FY25?

1. • The EBIT margin stood at 15.1%, down from 17.1% YoY. The EBITDA margin was 18.1%, a decline from 19.9% in the same quarter last year.

4. Has LTTS announced a dividend?

1. • Yes, LTTS has declared an interim dividend of ₹17 per share. The record date for the dividend is October 25, 2024.

5. What is LTTS’s performance in US dollar terms?

1. • In US dollar terms, LTTS reported $306.7 million in revenue, reflecting a 3.9% QoQ and 6.5% YoY growth. In constant currency, revenue grew by 3.4% QoQ and 6.3% YoY.

L and T Technology Services Q2 results

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