Mid-cap IT services provider L&T Infotech (LTI) has impressed the Street yet again with its stellar earnings performance. In the September quarter, the company reported a massive beat on revenue at $509 million, up 8.9% on a sequential basis in constant currency terms and ahead of the consensus estimate of 3.5% revenue growth. Growth was broad-based across verticals, geographies and service lines. Reacting to Q2FY22 earnings, shares of the company rose 10% on the NSE in Tuesday’s opening trade.
Its deal win momentum and deal pipeline remained in good stead. LTI won one new large deal in Europe with a total contract value of ₹30 million for five years. In a post earnings conference call, the company’s management said the deal pipeline is robust with a number of large deals. The management further added that LTI’s growth is constrained only by supply and without which the company would have grown at much higher rate against the backdrop of extremely strong, secular and sustainable demand environment. The company’s management is confident of top-quartile revenue performance and expects at least $2 billion revenue in FY22 on strong demand and good progress on client mining.
Ebit margins at 17.2% rose more than 80 basis points (bps) on a sequential basis, beating consensus estimate of 16.9%. Ebit is short for earnings before interest and tax. One basis point is one hundredth of a percentage point. Analysts say that despite the supply side cost pressures, margins are aided by continuously rising offshore mix, which is now at 83.6%.
Another highlight of the quarter was LTI’s net headcount addition of 4,084, up 11% sequentially and highest ever in the company’s history. With strong net addition in the last few quarters, LTI’s total headcount is up 31% year-on-year. Further, LTI has increased fresher hiring target to 5,500 and target hiring 4,000 resources with one-two years’ experience in FY22. It should be noted that its attrition has increased to 19.6%, up 440bps quarter-on-quarter.