LTTS - L&T Technology Services Limited Share Price

L&T Technology Services (LTTS) provided an optimistic outlook for FY26 during its Q4 FY25 earnings conference call. Management highlighted key achievements, including crossing Rs.10,000 crore in annual revenue, marking an annualized run rate of $1.4 billion, and recording the highest-ever Total Contract Value (TCV) bookings, even surpassing the previous record set in Q3 FY25.

For FY26, the company expects double-digit revenue growth in USD constant currency terms, supporting this prediction with multiple large deals in advanced stages of negotiation, including deals worth $100 million and $50 million. Management emphasized that despite the uncertain macroeconomic environment, they believe the ongoing rejigging of tariff-based supply chain dynamics presents significant growth opportunities. Notably, they anticipate that the recent deal momentum and a healthy TCV pipeline will continue into Q1 FY26, which is projected to mirror the strong performance of Q4 FY25.

Furthermore, management acknowledged challenges from deal ramp-up delays due to market headwinds in FY25 but expressed confidence in strengthening market share through investments in proprietary solutions and enhanced customer relationships. They highlighted that half of the largest deals won were against competitors, indicating a growing acceptance of LTTS's differentiated offerings, particularly in AI, Gen AI, and other related technologies.

In summary, management affirmed a medium-term revenue target of $2 billion, reflecting both resilience in operational strategy and confidence in market expansion despite current complexities.

Q&A Highlights from L&T Technology Services Q4 FY25 Earnings Call

1. Question: "In the quarter, you added $33 million incremental revenues. How much was from Intelliswift?"

Answer: "Intelliswift contributes an annualized business of $100 million. We report consolidated revenues, so the exact split isn't specified. In April, we are seeing the full impact of Intelliswift as it's included in this quarter, right from the closing at the start of January."

2. Question: "Does the guidance of double-digit growth include Intelliswift?"

Answer: "Yes, this growth will encompass contributions from Intelliswift. While we expect double-digit growth, it's not strictly at 10%. It's more optimistic than that, based on our strong backlog and recent deal wins."

3. Question: "Were you disappointed with the fourth quarter organic growth?"

Answer: "Yes, we anticipated better growth, but some large deals' ramp-ups were delayed, and we made market-driven investments to support strategic customers, which affected our organic growth."

4. Question: "Are you expecting a similar revenue decline in Q1 FY26 as seen in FY25?"

Answer: "We expect improvements in Sustainability and Technology segments, while Mobility might stabilize or show slight growth. We're actively minimizing seasonal impacts for Smart World, aiming for better QoQ results than last year."

5. Question: "How should we assess the ramp-up of large deals in the coming quarters?"

Answer: "Deals acquired in Q3 have begun ramping up, contributing to Q1 revenues. Although Mobility has some delays, I remain confident that revenues in Sustainability will see significant growth in Q1."

6. Question: "What factors inform your outlook on Mobility's growth?"

Answer: "While challenges exist in Mobility, we see transformation opportunities ahead. Relationships are yielding momentum on several fronts, and we're optimistic for a rebound later this fiscal year."

7. Question: "What is your stance on the ongoing macro headwinds and wage hikes for FY26?"

Answer: "We're cautiously optimistic about our growth, and while we have yet to finalize decisions on wage hikes, any adjustments depend on market conditions over the quarter."

8. Question: "What impact did client-requested investment projects have on revenue?"

Answer: "We chose to support several clients through unbilled investments for relationship building, which we see as a way to foster larger deals in the future. These were one-off considerations and not expected to be recurring."

9. Question: "Can revenues from those investments be a tailwind in Q1 and Q2 FY26?"

Answer: "Yes, while not directly tied to the same deals, these investments could contribute positively to our revenues as we expect a general uptick across various clients."

10. Question: "How do the recent large deals compare in terms of pricing and terms with previous quarters?"

Answer: "There's a consistent demand for efficiencies and solutions incorporating AI. While specific terms may vary, we're not experiencing significant deviations in pricing compared to previous quarters, maintaining standard margins."

This summary outlines key inquiries and responses from LTTS's earnings call, highlighting strategies, growth prospects, and market insights.