LLTS: a splendid performance in FY19!

/ May 11, 2019/ Financials, India, LTTS

LTTS continued to be impressive in FY19: the company grew revenues completed by 26.5% at CC (almost purely organic) to USD 723m. LLTS has now taken over Cyient as India’s largest listed ER&D pure-play.

The growth of LTTS was broad-based, across its five verticals, with the company absorbing in Q4, a USD 2.5m impact of a large insourcing move by a telecom & high-tech client.

What is impressive in the performance is that LLTS was able to grow that quickly without impacting its margin, nor its cash flow and capex. LTTS’ EBIT margin was 16.0%, up 300 bps (mostly resulting from USD and INR forex). FCF doubled, representing 14% of revenues and capex accounted for 2% of revenues. In short, LTTS is a financial powerhouse.

LTTS’ outlook for FY20 is very positive. The company has provided guidance of revenue growth of 14% to 16%. It still targets an EBITDA margin of 20% by FY21. The guidance includes the impact of a telecom and high-tech client that has terminated its contract with LTTS and insourcing its work. The impact is sizable and will represent a 400 bps impact (~USD 30m) on revenue growth.

LTTS continues to execute on its big deal strategy, across sectors, to fuel growth. The company has a good track record of managing these large deals without being hit on the operational side. It excels at transitioning the delivery of these contracts from mostly onshore to India within one to two quarters. LTTS has also done well in balancing the financial impact of these large contracts, as these large contracts are more profitable once delivery is in India. As a result, LTTS now has two accounts with USD50m in LTM revenues and three with USD 30m. This is significant, given the size of LTTS.

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