L&T Technology expects revival in Q2FY21

L&T Technology Services on Saturday informed the bourses about the impact of COVID-19 on its business and operations.

The company in an exchange filing said that its growth momentum has been affected due to this pandemic but it is seeing some traction in few verticals like Telecom & Hitech which accounts for nearly 20 per cent of total revenue and medical devices (nine per cent of total revenue), while the company expects industrial products, transportation and plant engineering to be impacted in the near term on account of furlough, deferral and temporary reduction in spending.

In terms of financial performance, the company expects its revenue (in USD terms) for the current quarter to decline sequentially up to a low double-digit percentage, with a consequent lower EBIT margin as compared to that reported for Q4FY20.

The company further added that with the organisation’s wide focus on opportunities for growth, it has witnessed an improvement in the deal pipeline since April 2020. Based on the current environment, it expects the revenue to increase sequentially from Q2FY21 onwards on the back of deal wins and a progressive increase in revenue traction through the remaining quarters of the current financial year. In line with the growth recovery coupled with cost rationalisation measures being undertaken, its EBIT margin is likely to witness sequential improvement on a constant currency basis, from Q2FY21 onwards.

The company holds healthy cash and investment of Rs 885.9 crore as on FY20.   

In response to this, the stock of L&T Technology Services dipped on the bourses today despite a positive trend in the broad market indices. The stock which opened at Rs 1,340.95 dipped nearly 2.5 per cent to touch an intraday low of Rs 1,310.4 apiece.