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LTTS has reported Q2FY24 revenues at $288.1mn, up 3.2% QoQ and 1.4% YoY in CC and +2.9%/+1.8% QoQ/YoY in USD terms. In INR terms, combined revenue came at INR23,865mn, growing 3.7% QoQ and 19.6% YoY. During the quarter, LTTS won a total of seven $10mn+ TCV deals across all industry segments including six deals of $15mn each. PAT for the quarter came at INR3,159mn (+11.5% YoY) with EPS at INR29.8. The Board have declared an interim dividend of INR17 per share.

* LTTS have achieved broad based growth across all its 5 segments, led by the Transportation and Plant engineering segment. Management is accelerating training and capability building and also partnering with US headquartered chip majors to build next-generation chips and software for Software Defined Vehicles (SDV) management to take advantage of the next wave of spending. A large deal pipeline and new technology conversations in aerospace shall drive growth in Transportation segment. Under Plant Engineering, customers are focused on investing across the spectrum in shale, low-carbon energy, carbon capture and renewables to fit themselves for greener fuels and continued capacity expansion in FMCG shall drive growth in Q3 and beyond. Industrial Products faced softness on account of delayed decision making whereas growth will be driven by digital products and digital manufacturing. In Telecom and Hitech segment, company has engaged more on the new-age chipsets that are designed for AI and cloud computing workloads, which has help to grow despite the challenges. Also, the large deal wins in Next-Gen space and opportunities in Media and Medicalspace are likely to keep growing.

* Operating (EBIT) margins for Q2FY24 came at 17.1% after absorbing wage hikes and investments in technology. These headwinds were offset through operational efficiencies, better SGA leverage, and cost optimization measures. The EBIT margin is in line with their aspirational band of 17%. The management expects the EBIT margins to recover towards 18% target range by H1FY26.

* Outlook: LTTS is investing in SDVs, AI, Cyber-security and will have close to 2,000 employees trained over the next few quarters. Their collaboration with hyper-scalers and chip companies is helping them develop AI solutions and services that address needs for industry like Auto, Manufacturing, and Medical. The deal pipeline also seems optimistic about their growth sustaining, however, there has been increased uncertainty over past few weeks and on grounds of prudence, management has trimmed revenue guidance to 17.5-18.5% cc for FY24E.

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