L&T Infotech Sees Better Growth, Large Deals In Second Half Of FY21

Larsen & Toubro Infotech Ltd. expects the second half of the ongoing fiscal to be better in terms of revenue and deal pipeline.

There’s a great opportunity for Indian IT industry to digitally transform various business of customers as they learn to operate in a new normal in the Covid-19 world, Sanjay Jalona, managing director and chief executive officer at the company, said in an interview with BloombergQuint’s Niraj Shah. Financial institutions need to on-board customers remotely now, he said.

The company, in a post-earnings conference call, also listed four growth components:

• Growth from top 20 accounts (58% of revenue)
• Focus on new account opening
• Invest and participate in growth accounts
• Continued traction to win large deals

L&T Infotech witnessed a 9.7% quarter-on-quarter rise in net profit at Rs 456.8 crore in the quarter ended September. Its dollar revenue increased 3.6% sequentially to $404.5 million, led by the BFSI, manufacturing and the European segment. The company’s margin, too, expanded to 19.9% from 17.4%, helped by lower operating expenses and employee costs.

The company even guided net profit at 14-15% for the second half of FY21 despite the first half’s net profit margin being around 14.7% and upcoming salary hike from the quarter ending March 2021. For the third quarter, the company expects at least 4% sequential dollar revenue growth, and 8.1% for the entire fiscal 2021.

In the second quarter, L&T Infotech had won deals of total contract value of $40 million.

Some other highlights from the conversation:

• Pent-up demand is not driving the growth but new operating models are helping to create newer opportunities for the industry
• Going to set up a separate unit with special focus on cloud architecture and second unit for big data products
• Need to be cautious due to rising inequalities and turbulence in the customer markets

Watch the full interview here: