L&T Technology Q1 Results Review - Seasonal Headwinds Play Spoilsport; Guidance Retained: Motilal Oswal

Motilal Oswal Report

L&T Technology Services Ltd.’s Q1 FY25 revenue was down 3.1% QoQ /up 6.1% YoY in constant currency versus our estimate of a 0.5% QoQ drop. In USD terms, revenue came in at $295 million (down 3.3% QoQ/up 5.4% YoY).

The revenue decline was due to its restated hi-tech vertical (down 11.6% QoQ). Ebitda was down 9.3% QoQ but flat YoY at Rs 4.5 billion (estimate: Rs 4.8 billion). PAT came in at Rs 3.1 billion (estimate: Rs 3.3 billion), down 8.0% QoQ/up 0.8% YoY.

While Q1 is a seasonally weak quarter for L&T Tech, the magnitude of decline in its hi-tech vertical (which now also includes its SWC business) was surprising. Mobility had a strong quarter, up 6.4% QoQ in USD terms.

That said, the company has retained its guidance, which implies a strong compound quarterly growth rate range of 4.5%-5.5% for the next three quarters. While clients are reconsidering certain EV programs, L&T Tech’s diversified offerings in the transportation vertical could continue to drive growth for the company over the medium term.

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