Detailed Narrative
Q4 FY25 Performance and Annual Milestones
L&T Technology Services reported a strong Q4 FY25, with revenue reaching ₹2,982 crores, marking a 12.4% sequential and 17.5% YoY growth. For the full fiscal year, the company crossed the ₹10,000 crore revenue milestone, achieving ₹10,670 crores, a 10.6% growth over FY24. The annualized run rate for FY25 stood at $1.4 billion. The quarter also saw the highest ever large deal TCV bookings, with order inflow increasing over 25% QoQ, and the company cumulatively surpassed 1,500 patent filings.
EBIT Margin Compression and Strategic Investments
EBIT margins for Q4 FY25 were 13.2%, a decline primarily due to the integration of Intelliswift, which had an impact of approximately 150 basis points. Additionally, macro-related headwinds and strategic investments in proprietary solutions and niche engineering work, done on an investment basis to strengthen client relationships, contributed to margin compression. For the full year FY25, EBIT margin was 14.9%, influenced by H1 investments in new-edge technologies and leadership, which helped secure large deals in H2.
Segmental Performance and Outlook
The Tech segment demonstrated the strongest growth, with a 27.9% sequential dollar revenue increase, driven by Smart World and organic Software and Platform subsegments, alongside Intelliswift contributions. Sustainability grew 2% QoQ, with higher growth tapered by deal ramp-up delays but expected to accelerate in FY26. The Mobility segment remained flat QoQ and is anticipated to stay muted in the immediate term, with a turnaround expected towards the end of Q2 FY26, despite a notable €50 Mn SDV deal win.
Large Deal Momentum and Pipeline Health
L&T Technology Services maintained strong large deal momentum, securing multiple deals in Q4 FY25, including one $80 Mn+, one $50 Mn+, one $30 Mn+, one $20 Mn+, and three $10 Mn+ deals. For the full year FY25, the company closed 32 deals greater than $10 Mn in TCV. Management indicated a robust pipeline with multiple $100 Mn and $50 Mn deals in advanced stages of negotiation, expecting Q1 FY26 deal wins to be similar to Q4 FY25.
Capital Allocation and Shareholder Returns
The company's Free Cash Flow for FY25 reached an all-time high of ₹1,379 crores, representing 109% of Net Income. Cash and Investments stood at ₹2,976 crores at the end of FY25, 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 Return on Equity for FY25 was 22%.
FY26 Outlook and Medium-Term Targets
Management expressed optimism for FY26, expecting it to be a better year than FY25 with double-digit revenue growth in USD constant currency. The company reaffirmed its medium-term revenue outlook of $2 billion. Aspirationally, EBIT margins are targeted to improve to mid-16% levels between Q4 FY27 and Q1 FY28. The company plans to hire 2,500 freshers in FY26, with the first batch of 500 joining in June, signaling preparation for a growth year.