Riding on broad-based growth, L&T Technology Services (LTTS), a subsidiary of Larsen and Toubro, posted a 5.45% rise in net profit for the quarter ended March on a sequential basis, beating analysts’ estimates. The firm also forayed into the air mobility space with a $100-million deal win, and expects similar wins in this space. The firm expects to hit $1 billion in revenue run rate by the second or third quarter of the current fiscal, its CEO and MD Amit Chadha told Rajesh Kurup in an interview. The company is also looking to acquire 5G test spectrum and setting up labs across the world, he added. Edited excerpts:
For the fourth quarter and full year, LTTS posted good numbers, beating analysts’ estimates. Was it a broad-based growth?
It was a fairly broad-based growth for Q4 and the full year. For FY22, our plant engineering grew by 26%, transportation by 23%, industry products by 21%, telecom by 15% and medical by 11%. The deal pipeline during this year and quarter were the highest ever, which also added to the growth. On the six-bets strategy we are pursuing for growth, Electric Autonomous and Connected Vehicle (EACV), digital manufacturing and sustainability, artificial intelligence & digital products, and partly the 5G bet, have taken off. While med-tech would take a little more time, our geographies such as the US and Europe have grown.
Would you be able to sustain the growth level going forward, especially in FY23?
On the six growth areas, we are seeing tailwinds in EACV, while digital manufacturing and digital products will continue to grow, sustainability has not picked in yet, and 5G has not kicked in completely yet. I do believe these will pick up in FY23, going on to FY25. I believe there is a fair degree of demand we can address.
As of Q4, your revenues are at $880 million. When will you be hitting $1 billion?
We are reassuring that we will hit $1 billion in revenue run rate by Q2 or Q3 of FY23. For the current financial year, we have a revenue guidance of 13.5-15.5% in dollar terms. We aspire to have a $1.5 billion run rate by FY25. This is based on broad-based growth, based on our investments in labs, people, global engineering academy and our go-to market partnerships with Bentley, NVIDIA and Mavenir, among others. For LTTS, and the industry in general, attrition has been rising.
Our attrition in absolute terms has stabilised. But because it’s LTM (last 12 months) trailing, you’re seeing that effect of attrition from about 17% to about 20%. In the near-term, we do expect attrition to be at these levels but in the medium term, we believe this will come down. We have embarked on a number of initiatives to contain attrition, including ring-fencing some of our critical talent, and providing overseas opportunities for our workforce. We did do corrections for a population in January and the next set of increments will happen in July. In January, we had provided salary hikes for critical talent and for the larger mass, it will be in July.
What are your hiring plans for FY23?
We have made offers to about 2,500 freshers for FY23, who are expected to join in the first six months of the year. As of March-end, the company had a total employee strength of 20,861.
What is the importance of the $100-million deal win Jaunt Air Mobility?
Jaunt is a Texas-headquartered aerospace firm, and the deal win enables us to foray into the new area of electric-powered vertical take-off aircraft. This is all about urban mobility. We are the first Indian engineering company that has signed a deal to work with the customer on the entire aircraft, including part distribution system, flight control system, battery management system and the cockpit split system. So far, we had success in automotive under our EACV strategy but this is our first success in air. With this we are foraying into a new sector and building capabilities. LTTS filed a number of patents in FY22.
At the end of the March quarter, our patents’ portfolio stood at 868, out of which 605 were co-authored with customers. For the year, LTTS filed 98 patents and 121 patents for our customers. Last year, we had signed 28 for ourselves and 124 for customers. Overall, the company now owns 605 patents and owns 263.
On your 5G plans, you were looking at acquiring test spectrum and setting up labs. What is the update?
We have set up device testing lab in Bengaluru and Dallas. We are acquiring spectrum licence to set up a lab in Mysuru and another for automotive manufacturing customers in Munich, Germany. And we’re talking about a third one to be set up somewhere in Seattle area.