L&T Technology Services Limited — Q4 FY25 earnings call

Call held 24 Apr 2025

Management summary

L&T Technology Services Limited reported a strong Q4 FY25 with 10.7% USD revenue growth and record large deal wins, pushing FY25 annual revenue past ₹10,000 crores. Despite macroeconomic headwinds and integration costs from Intelliswift impacting Q4 EBIT margins (13.2%), the company remains optimistic, guiding for double-digit USD CC revenue growth in FY26 and reaffirming its $2 billion medium-term revenue target. Strategic investments in AI and new technologies, coupled with a robust deal pipeline, are expected to drive future growth.

Highlights

  • Q4 FY25 revenue grew 10.7% in USD, driven by Tech and Sustainability segments, marking the third straight quarter of sequential organic and overall growth.

  • Achieved highest ever large deal TCV bookings in Q4, with order inflow from large deals alone up over 25% QoQ, including one $80 Mn+ deal.

  • FY25 revenue crossed ₹10,670 crores, marking an 8.9% growth in USD constant currency, exceeding India Inc.'s average growth.

  • FY25 Free Cash Flow was ₹1,379 crores, an all-time high and 109% of Net Income, with cash and investments improving to ₹2,976 crores.

  • Successfully integrated Intelliswift, adding 43 active clients and strengthening capabilities in Software and Platforms for hyperscalers.

Concerns

  • Q4 FY25 EBIT margins were 13.2%, impacted by Intelliswift integration (approx. 150 bps) and macro-related headwinds in higher-margin segments.

  • Delay in ramp-ups and deferral of some large deals to the end of Q4 due to the macroeconomic environment, including one deal announced on March 31.

  • Sustainability and Mobility segment margins declined or remained flat in Q4 due to absorption of costs for select strategic customers and lower than anticipated revenues.

Key financials

3 periods

Q4 FY25

  • Revenue
    ₹2,982 Cr
    YoY +17.5% QoQ +12.4%
  • EBIT Margin
    13.2%
  • Net Income
    ₹311 Cr
  • Offshore Mix
    55.8%
  • Attrition Rate
    14.3%

FY25

  • Revenue
    ₹10,670 Cr
    YoY +10.6%
  • EBIT Margin
    14.9%
  • Net Income
    ₹1,267 Cr
  • Free Cash Flow
    ₹1,379 Cr
  • Return on Equity
    22%

FY25 end

  • Cash and Investments
    ₹2,976 Cr

What they filed

Q1 FY27: revenue up 11.4%, net profit up 13.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,573 2,653 2,638 2,638 2,980 +16%2,787 +5%2,858 +8%2,940 +11%
EBITDA466 495 433 441 491 +5%498 +1%521 +20%548 +24%
Net profit320 320 310 316 329 +3%303 −5%333 +7%357 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentQoQ Revenue GrowthFY25 USD CC Growth
Tech0.279 decimal_fraction0.113 decimal_fraction
Sustainability0.02 decimal_fraction0.057 decimal_fraction
Mobility0 decimal_fraction0.093 decimal_fraction

Order book

high confidence

Composition

  • $80 Mn+ deals (deal size)
  • $50 Mn+ deals (deal size)
  • $30 Mn+ deals (deal size)
  • $20 Mn+ deals (deal size)
  • $10 Mn+ deals (deal size)

Pipeline

deal pipeline tcv

Multiple $100 Mn and $50 Mn deals at advanced negotiation stages

Cancellations & deferrals

  • deferred: Few large deals won saw delay in ramp-ups and signing of some large deals got deferred to the end of the quarter, including one announced on March 31.
Q4 FY25 saw record highest ever deal wins, with strong momentum continuing from Q3 and a robust pipeline for future quarters.

Source: Prepared remarks

Capital allocation

high confidence
  • Dividend ₹38/share (final) Payout ratio 46%
    The Board today recommended a Final Dividend of 38/share taking the total dividend for FY25 to 55/share translating to a dividend payout of 46% for FY25.
  • M&A Intelliswift Acquisition · Integrated

    to build capabilities in Software and Platforms capability for Hyperscalers

    Consolidation had an impact of roughly 150 bps on the EBIT margins in Q4 FY25.

    Finally, acquisition of Intelliswift and integration during Q4FY25, which of course is in line with our strategy to build capabilities in Software and Platforms capability for Hyperscalers
  • Liquidity Cash ₹2,976 Cr Cash and Investments improved to ₹2,976 crores end of FY25 vs ₹2,883 crores end of FY24, after paying for Intelliswift acquisition.
    Our Cash and Investments improved to 2,976 crores end of FY25 vs 2,883 crores end of FY24. This is after paying for Intelliswift acquisition.

Guidance & targets

Revenue

  • Medium-term Revenue Target Revenue · medium-term · High confidence $2 billion
    We would also like to reaffirm our medium-term outlook of $2 billion of revenue

    — Amit Chadha

Profitability

  • EBIT Margins Profitability · Q4 FY27 and Q1 FY28 · High confidence mid-16%
    And reiterate our aspiration of improving EBIT margins to mid-16% levels between Q4FY27 and Q1FY28.

    — Rajeev Gupta

Operational

  • Offshore Mix Operational · medium term · Medium confidence 60%
    We aspire to improve this ratio to 60% levels in the medium term.

    — Rajeev Gupta

Headcount

  • Freshers Hiring Headcount · FY26 · High confidence 2,500
    We're adding 2,500 freshers. The first lot of 500 will join in June towards the end.

    — Amit Chadha

Market context

  • USD CC Revenue Growth Revenue · FY26 · High confidence double-digit
    We expect FY26 to be a better year than FY25, with double-digit revenue growth in USD CC terms for FY26

    — Amit Chadha

What to watch in Q1 FY26

FY26 USD CC Revenue Growth

FY26
Current FY25: 8.9%
Target Double-digit growth

Why it matters

To assess if the company achieves its stated growth target for the full fiscal year, indicating successful deal ramp-ups and market share gains.

We expect FY26 to be a better year than FY25, with double-digit revenue growth in USD CC terms for FY26

Risks & concerns

  • Macroeconomic Headwinds and Tightening Demand

    medium

    The overall macroeconomic environment created unexpected headwinds, leading to delays in deal ramp-ups and deferrals, and impacting anticipated revenues in Q4 FY25.

    Management acknowledged

  • Margin Compression from Intelliswift Integration and Strategic Investments

    medium

    Q4 FY25 EBIT margins were impacted by approximately 150 bps due to Intelliswift consolidation and additional costs absorbed to support select strategic customers on an investment basis.

    Management acknowledged

  • Muted Mobility Segment Performance

    medium

    The Mobility segment's revenues remained flat QoQ, with some deals delayed, and is expected to stay muted in the immediate term, with a turnaround expected towards the end of Q2 FY26.

    Management acknowledged

  • Cyclical Growth in Smart World & Communication, Media, Consumer Tech

    low

    Cyclical growth in the Smart World segment and broader transformation in Communication, Media, and Consumer Tech sectors impacted Tech segment margins in Q4 FY25.

    Management acknowledged

Q&A highlights

7 direct
Intelliswift Revenue Contribution and Margin Impact Direct
So, we did clarify in our Q3 commentary that Intelliswift is an annualized business of $100 million. Of course we continue to work towards growing that business. ... We saw roughly about 150 bps of margin dilution on account of Intelliswift consolidation.

Clarified the financial scale of Intelliswift and its direct impact on Q4 margins, which was a key concern for analysts.

Asked by Yogesh Aggarwal, HSBC

Q4 Organic Growth and Deal Deferrals Direct
Few of the large deals we won saw delay in ramp-ups and signing of some large deals got deferred to the end of the quarter. ... In order to support select strategic customers some of our proprietary software solutions and niche engineering work, which was done, had to be done on an investment basis.

Explained the reasons behind lower-than-anticipated Q4 organic growth, attributing it to macro headwinds and strategic investments rather than a lack of deal wins.

Asked by Yogesh Aggarwal, HSBC

FY26 Double-Digit Growth Guidance Direct
But having said that, with the backlog of deals that we have got; in addition to that, the strong deals win we have had in the last 2 quarters; we believe double-digit growth is assured. Now where will that double digit fall is something to be seen. It's not 10%, it's definitely greater than that, but where will it be?

Reaffirmed confidence in strong double-digit growth for FY26, clarifying it would be greater than 10% and driven by both organic growth and Intelliswift.

Asked by Yogesh Aggarwal, HSBC

Segmental Margin Evolution in FY26 Partial
Tech margins had the impact of Intelliswift acquisition roughly about 150 bps. Second, it also had the cyclical growth of Smart World. Now to answer further to your question in terms of where I see the baseline in terms of the EBITDA margins for each of the segments, I would request that we kind of wait for about a quarter as things are settling down.

Management deferred providing specific segmental margin baselines for FY26, indicating ongoing volatility and the need for more clarity post-integration and macro stabilization.

Asked by Karan Uppal, Phillip Capital India

Ramp-up of Large Deals and Wage Hike Timing Direct
the ones that we won in Q3 have all ramped up now and will provide us revenue in Q1 and beyond. Other than the one that we won on 31st March, the other deals have also started ramping up and should provide us positive revenues in Q1. ... we have yet not made any decision in terms of wage hike. ... we haven't made a decision on when to deliver the hikes in CY25.

Provided clarity on the revenue contribution timeline of recent large deal wins and the status of wage hike decisions, addressing concerns about execution and cost management.

Asked by Bhavik Mehta, JPMorgan

Strategic Investments and Reimbursement Direct
in one particular case, it was investments that we had made, and we had implemented the product for them, the widget for them and there was a certain money owed to us and they came back and said that rather than paying you, can you say that this is goodwill generated for us. ... So, we don't see this ongoing, but this is a one-off that we had to accept.

Clarified that certain costs absorbed for strategic customers were one-off investments for relationship building and market share, not expected to be reimbursed, impacting Q4 margins.

Asked by Ashish Aggarwal, Sundaram AMC

Mobility Segment Outlook and Pain Points Direct
The Mobility segment showed resilience with revenues remaining flat compared to previous quarter like we had guided you in the last quarter ... The pain is there. What we do believe is that this is going to last for about a quarter or so like we said earlier. But given the solutions and some of the deep relationships that we have and the deals that we have won, ... we do believe that the growth will come back sooner rather than later in this sector.

Addressed concerns about the Mobility segment, acknowledging current pain but expressing confidence in a turnaround by end of Q2 FY26 due to strategic wins and strong client relationships.

Asked by Karan Uppal, Phillip Capital India

Duration of Market Ambiguity Direct
The market as such will remain ambiguous for about another quarter or so. Probably towards the end of second quarter of the financial year, we believe that this will start settling down.

Provided a timeline for when management expects the current macroeconomic ambiguity to subside, offering a clearer outlook for business conditions.

Asked by Sulabh Govila, Morgan Stanley

3 min read 6 chapters

Detailed narrative

Q4 FY25 Performance and Annual Milestones

L&T Technology Services Limited (LTTS) reported a robust Q4 FY25, achieving 10.7% USD revenue growth, primarily driven by its Tech and Sustainability segments. This marks the third consecutive quarter of sequential organic and overall growth. For the full fiscal year 2025, the company crossed the significant milestone of ₹10,000 crores in annual revenue, growing 8.9% in USD constant currency. LTTS also surpassed 1,500 patent filings to date, with 206 patents filed in FY25 alone, including 190 in AI and Gen AI domains.

Record Deal Wins and Strong Pipeline

Q4 FY25 saw LTTS achieve its highest-ever large deal TCV bookings, surpassing even the previous record set in Q3. The quarter's wins included one $80 Mn+, one $50 Mn+, one $30 Mn+, one $20 Mn+, and three $10 Mn+ deals, contributing to a QoQ increase of over 25% in large deal order inflow. For the full FY25, LTTS closed 32 deals greater than $10 Mn in TCV. The company maintains a strong pipeline, with multiple $100 Mn and $50 Mn deals currently in advanced stages of negotiation, and anticipates Q1 FY26 deal wins to be similar to Q4 FY25.

Segmental Dynamics and Strategic Investments

The Tech segment demonstrated the strongest growth in Q4 FY25, with a 27.9% sequential revenue increase, boosted by Smart World and organic Software and Platform offerings, as well as the integration of Intelliswift. Sustainability grew 2% QoQ, while Mobility revenues remained flat. Management noted strategic investments in proprietary software solutions and niche engineering work for select customers on an investment basis, which impacted Q4 margins but are expected to strengthen future relationships and market share. The company is also seeing strong demand in Plant Engineering and Industrial Products, driven by capex projects and digital transformation.

Margin Performance and Intelliswift Integration Impact

Q4 FY25 EBIT margins stood at 13.2%, experiencing an approximate 150 basis points impact from the consolidation of Intelliswift, as previously guided. Additional pressure came from macro-related headwinds affecting anticipated revenues in higher-margin segments and the costs absorbed for strategic customer support. For the full FY25, the EBIT margin was 14.9%. The company aims to improve EBIT margins to mid-16% levels between Q4 FY27 and Q1 FY28, leveraging operational efficiencies and market share gains.

Capital Allocation and Shareholder Returns

LTTS reported an all-time high Free Cash Flow of ₹1,379 crores for FY25, representing 109% of Net Income. Cash and Investments increased to ₹2,976 crores by the end of FY25, even after funding the Intelliswift acquisition. The Board recommended a final dividend of ₹38 per share, bringing the total dividend for FY25 to ₹55 per share, translating to a dividend payout ratio of 46%. The integration of Intelliswift, an annualized $100 million business, was completed in Q4, enhancing capabilities for hyperscalers.

FY26 Outlook and Macroeconomic Environment

LTTS expects FY26 to be a better year than FY25, projecting double-digit revenue growth in USD constant currency. The company reaffirmed its medium-term revenue outlook of $2 billion. While acknowledging the uncertain market environment and tightening demand conditions, management believes this will create opportunities for the ER&D industry in the long term. The market ambiguity is expected to persist for another quarter or so, potentially settling down by the end of Q2 FY26, which could lead to consolidation and new transformation deals.

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