L&T Technology Services slips 8% on disappointing June quarter results

In Q1FY21 EBIT margins fell 310 bps QoQ to 12.1 per cent.

Shares of L&T Technology Services (LTTS) slipped 8 per cent to Rs 1,325 in the intra-day trade on the BSE on Friday on profit booking after the company reported a disappointing set of June quarter (Q1FY21) numbers. In the past three weeks, the stock of L&T group company had rallied 14 per cent, as compared to a 4.7 per cent rise in the S&P BSE Sensex.

In Q1FY21, LTTS’s revenues stood at 193.9 million, down 12.7 per cent quarter-on-quarter (QoQ), 10.9 per cent year-on-year (YoY) in constant currency terms. Rupee revenues declined 10.5 per cent QoQ at Rs 1,347 crore. EBIT (earnings before interest and tax) margins fell 310 bps QoQ to 12.1 per cent.

The company said the operating margin in the quarter was impacted primarily due to a drop in utilisation because of the furloughs and temporary reduction in spending by the customers. The company expects an improvement in revenues and margins based on ramp-up of deals. However, considering a weak Q1FY21, it is expected to report 9-10 per cent dip in FY21E revenues.

“Based on the deal wins and customer conversations, we see a path for recovery and expect sequential growth in revenue over the remaining quarters of the current fiscal. Our US dollar revenue guidance for FY21 is for a decline of 9-10 per cent. The cost rationalisation measures we have undertaken and the recovery in revenue growth will help us to improve operating margin going forward,” Dr. Keshab Panda, CEO & Managing Director at L&T Technology Services said.

The stock trimmed its early morning losses and was trading 3 per cent lower at Rs 1,396 on the BSE at 10:40 am. In comparison, the S&P BSE Sensex was up 0.63 per cent at 36,700 points. A combined 356,000 equity shares have changed hands on the counter on the NSE and BSE so far.