LTTS – Q2 FY20 (Unaudited – Cons.)
Share price – 265
Total revenue from operations at 1,402 Cr
1,266 Cr (10.72%) YoY | 1,347 Cr (4.09%) QoQ
Half year revenue: 2,749 Cr Vs. 2,418 Cr (13.62%)
Net Profit of 206.2 Cr
191.8 Cr (7.83%) YoY 204.1 (0.97%) QoQ
Half year ending Net Profit: 410.3 Cr Vs. 389.9 Cr (5.14%)
EPS (in Rs.) 19.49
18.17 YoY | 19.30 QoQ
Half Year ending EPS: 38.79 Vs. 37.10
View: Result is slightly below expectation. However YoY revenue up and profit also up but profit for H1 is single digit and around 5% only. QoQ also revenue and profit slightly up.
Business Highlights & Updates:
Revenue of $197.7 million for the quarter; growth of 1.9% QoQ and 11.6% YoY; growth in constant currency at 2.5% QoQ and 11.9% YoY
EBITDA of Q2FY20 is INR 228.9 Cr Vs. 283.2 Cr in Q2FY19 Vs. 272.7 Cr in Q1FY20. EBITDA Margin is around 31% Vs. 32.3% Vs. 32.9%.
EBIT of ₹2,388 million for the quarter, growth of 3.9% QoQ and 18.3% YoY; EBIT margin at 17.0%
Geography business in Q2FY20 North America contributes 61.7% Vs. 57.7% in Q2FY19, Europe contributes 14.4% Vs. 17.2%, India contribute 13.1% Vs. 12.5% and rest of the world contributes 10.7% Vs. 12.6%.
During the quarter, LTTS won 8 multi-million dollar deals across all major industry segments, including new digital engineering programs for Automotive, Plant Engineering and Medical customers. On a YoY basis, LTTS has increased its USD20mn+ clients by 4 and its USD10mn+ clients by 3. Total number of active clients is 259 as compare to 239 in Q2FY19 and 258 in Q1FY20.
At the end of the second quarter, the patents portfolio of L&T Technology Services stood at 416, out of which 300 are co-authored with its customers and the rest are filed by LTTS.
ROE and ROCE is around 31% and 42% respectively and book value per share is around INR 234 and share is currently trading at 7x of its book value. Company is currently trading at annualized PE of around 22 which is average as per Industry benchmark. Promoter holding in the company is around 74.9% which is too strong and stable. FIIs and mutual fund hold around 8.9% and 3.8% in the company and its also slightly increased as compare to QoQ. Company is virtually debt free.
The Board of Directors at its meeting held on October 18, 2019, has declared an interim dividend of INR 7.50/-per equity share. Same amount of interim dividend paid in last year as well.
Share price high 1850 and now 1645. L&T Technology Services Limited (LTTS) is a listed subsidiary of Larsen & Toubro Limited focused on Engineering and R&D (ER&D) services. Company offer consultancy, design, development and testing services across the product and process development life cycle. Customer base includes 69 Fortune 500 companies and 51 of the world’s top ER&D companies, across industrial products, medical devices, transportation, telecom & hi-tech, and the process industries. Headquartered in India, company has over 16,700 employees spread across 17 global design centers, 28 global sales offices and 49 innovation labs as of September 30, 2019.
Long term investor should continue with the company with target price of INR 2500. Investor can also add on SIP basis for price correction. LTTS is good share for long term portfolio
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.