L&T Infotech Expects Annual Wage Hikes To Impact Q1 Margin

L&T Infotech Ltd.’s revenue and net profit rose in the three months ended March, aided by large deal wins. But its margin was impacted on account of annual wage hikes offered at the start of the fourth quarter.

The IT services and solutions provider reported a 4.6% sequential rise in dollar revenue in the fourth quarter. It onboarded 427 new clients, including one worth more than $100 million. “In Q4, we won two large deals with a net new total contract value of $66 million, culminating into a record large deal TCV for FY21,” said Chief Executive Officer and Managing Director Sanjay Jalona.

The company saw a drop in attrition rate to 12.3% in the fourth quarter from 12.4% in the preceding three months. But an 8.4% sequential increase in direct costs impacted margin during the fourth quarter. L&T Infotech’s EBIT margin contracted 126 basis points over the preceding three months to 19.4%.

And Jalona told BloombergQuint’s Niraj Shah that he expects the annual wage hikes to impact margin in the April-June period as well.

For FY22, he expects a large deal pipeline to remain robust, and is confident that the company is in a good space to deliver industry-leading growth. “We will continue to invest in the strength of our business as we remain committed to growth in FY22 as well.”

FY21 Highlights

• It reported 9.5% revenue growth.
• Its net profit rose 27.5% over the preceding fiscal.

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