L&T Technology Services Ltd

L&T Technology Services (LTTS) was established through a group restructuring exercise by the L&T Group, wherein, integrated engineering services of L&T and product engineering services business of L&T Infotech were transferred to LTTS. As a result, LTTS has emerged as one of the leading global pure-play ER&D services, providing services to manufacturing, technology and process engineering companies to help develop and build products, processes and infrastructure required to deliver products and services to end customers. The company leverages on the strengths of parent company, L&T, a leading Indian conglomerate in technology, engineering, construction, manufacturing and finance. The company derives 58.9% from North America, 16.0% from Europe, 13.9% from India and 11.2% from Rest of the World (RoW). It has operations spread across five industry segments, viz., transportation, industrial products, telecom and hi-tech, process industry and medical devices. Their 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, they have over 15,100 employees spread across 17 global design centers, 28 global sales offices and 49 innovation labs as of March 31, 2019.

Double Digit Growth helped to expand margins:
LTTS posted steady 3.0% QoQ USD revenue growth. Growth in all other verticals such as medical devices (up 7.1% QoQ) and transportation (up 6.9% QoQ); process industry (up 5.1%) also reported robust revenue growth. Telecom and Hi-Tech (flat QoQ) was impacted by client-specific issues. For FY19, all its industry verticals delivered double-digit YoY growth. Digital revenue jumped 58% YoY in FY19 and now contributes 33% to total revenue. LTTS EBITDA margins for FY 19 expanded by 10bps which is above the street estimates. Management has guided that for FY20 the USD revenue growth would be 14%-16%.

Focused and continuing to be leader in ER&D services:
LTTS is been market leader a niche provider in ER & D services. Company is been providing complete ER & D services since inception. Company has developed itself as a huge brand globally into this segment with more than 250 patents. The company covers phases from conceptualization to implementation within the product and manufacturing engineering life cycles, including consulting, design, development, testing, maintenance, go-to-market and after-market services.

Good Client retention rate:
L&T Technology services has good retention rate in terms of clients, Companies 90% revenues are repeat business. Company’s top 30 clients of LTTS have a client relationship of more than 6 years. Company is completely engaged in providing complete solutions to their clients. Company has long standing relations with its clients, and it includes around 50 leading fortune 500 companies such as Calsonic Kansai, Rockwell automation, P& G,  Danaher and Eaton.

Strong Parentage:
L&T Technology services are backed by strong parent i.e. L&T limited. LTTS completely leverages strong engineering capabilities as well as its relationships. L&T technology services, incorporated in the year 2013, were a part of L&T group. The association with the L&T brand provides the company with a competitive advantage in attracting talent, benefiting from Promoter's global network, exploring potential business opportunities, corporate governance practices and acquiring direct access to senior decision makers in potential end customers. End-to-end engineering expertise backed by parent's engineering heritage of over 75 years provides the company with a competitive edge over other ER&D players.

Wide geographical reach & diversified business:
L&T Technology services has a wide global presence, It is present in all the major continent’s such as America, Europe, Australia, South Africa, middle east etc. It has multi-vertical industry expertise such as, Transportation, Industrial products, telecom, process industry and medical devices. It cross leverages and its capabilities and delivers ER& D services to its customers in different verticals. LTTS has also achieved market leader positions in some of these verticals.