LTTS — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to L&T Technology Services Limited Q1 FY24

Questions and answers

Moderator · Conference Operator

Thank you very much.

The first question is from the line of Mukul Garg from Motilal Oswal Financial Services.

Please go ahead.

Mukul Garg

Amit, just one question from my side.

And I think – sorry about this being a recurring topic.

But given the delays and push outs which you saw in the first quarter, what is giving us the confidence of delivering a 10% organic growth in FY24?

What really are you seeing in terms of client visibility that such issues might not recur anytime over the next 3 quarters?

Because currently, if I kind of do a rough number crunching, it looks like your compounded quarterly growth rate would be upwards of 4% for the next 3 quarters.

If you could just help us walk through what really is behind this confidence of maintaining the revenue growth?

Amit Chadha

Thank you, Mukul.

So, a couple of things here, and I'll answer it broadly.

So, we look at growth, right?

Number one, some of the deals did get delayed in terms of decisions.

We were expecting them to be signed end of April, early May, but they got signed towards the end of June, right?

Second, if I look at Plant Engineering, it was not a deal problem.

It was more a – getting inputs from customer on time problem.

So, that book of business still is with us and therefore can be accelerated, executed.

So, I don't have a problem there.

I have an issue in Semcon, which I don't know if it will be a 1 quarter pain or is it a 1.5 quarter pain, right?

So that's the only blip that I see.

But given the facts that First, pipeline is stronger now than it was a quarter ago and YoY; Second, the 6 deals that we have won, those have gone into execution, and Third, there are other deals in the pipeline that we are expecting to close or very close to closing, I do have confidence of retaining the guidance.

Now also, on SWC, it's H1 to H2 business, H2 being much better than H1.

So overall, that 20% plus holds that we are at this stage.

Mukul Garg

Right.

Sir, just a quick follow-up on that.

Given that you have seen scaling up in these 6 deals in the last few months, is the confidence also kind of baking in a fairly strong second quarter, which gives you enough buffer for any potential trouble down the line in the second half?

Amit Chadha

Yes, Mukul.

See, I'll tell you what we did.

So, after I went back in April, we have spent time talking to the clients, working with them through their decision-making process.

One, reality is where a deal would take 2 signatures, it now takes 4 signatures, right?

That's the reality.

So how do we get that done quickly – is the whole thing that we continue to work on.

Second, I'm betting on the fact that some of the deals that we are sitting on in Semcon or in Consumer Electronics will close faster than what I saw in Q1. And thirdly, I do expect H2 to be better than H1 as we stand today.

We are working on all 3, in fact, I should confirm to you that net headcount will go up by at least 750 people in Q2 as compared to Q1, and we're already on our way to making those offers, people have been joining us.

So fairly comfortable and confident.

Q1 FY24 Earnings Call July 18, 2023 But we'll keep you updated, Mukul.

I mean we've always been very transparent, very direct, and we thank you all for your confidence in us.

So, we continue to work on this and come back to you.

We, in fact, hosted a client advisory council first time ever in our history.

So about 16 clients controlling a huge amount of revenue and market cap came together, spent some time with us.

So, we've got some trends from them.

We've got some information on – why don't you approve what you don't approve also.

So fairly good conversations, candid conversations, I'm fairly comfortable.

Moderator · Conference Operator

Thank you.

The next question is from the line of Sulabh Govila from Morgan Stanley.

Please go ahead.

Sulabh Govila

My first question is on SWC.

So, on the numbers that is reported, which is 1Q FY23 and the 4Q FY23 I just wanted to understand that in this business, is there some variability involved in other expenses because they don't change much as a percentage of revenues?

Rajeev Gupta

Sulabh, this is Rajeev here.

I'll take that question.

So, like I said, we've had to restate financials of the previous quarter to include SWC.

So, what you see in terms of other expenses is more like-to-like.

And hence, there is nothing in addition.

We don't expect that the other expenses will increase or decrease materially.

This pretty much reflects what is the reality of that business.

Sulabh Govila

Sure.

Understood.

Maybe I'll take that offline.

My second question is with respect to Plant Engineering business.

So, in the past 2 to 3 quarters, we've seen some volatility in this business.

We saw a decline in Q3, and then we saw a sharp bounce in Q4, and we thought that the vertical has sort of recovered.

Now the issues could be different in different quarters, but just trying to understand that what's giving us the confidence that the volatility which we have seen in the past 2 to 3 quarters will not recur in the coming quarters?

Amit Chadha

Sure.

So, if I look back at our Plant Engineering and I'm scrolling through data as I look at it for you, right.

If I look back at FY22, if I go back to FY22, and I see there was a constant increase QoQ, every quarter, right?

I come to FY23, and yes, there was a one-off decrease in Q3, but it continued to the upward trajectory, right?

And if I look at Q1 now, we've had a blip, and we are sharing with you that some of these decisions – design decisions from the customers were delayed and it was not a budget issue.

And therefore, with the backlog that we have got, the new orders that we have signed, with the rigor that we have put in, I do believe that this will be in the past.

Additionally, we are winning new digital factory and digital plant deals from customers in Plant Engineering that give us the confidence that we will see upward trend from here.

In fact, now we are adding some resources that we can immediately, hands on deck, to make sure we're able to deliver.

I also want to share that now we have established outpost in the US for clients in Plant Engineering, that should help us in terms of engaging a lot more local talent, and the same will be happening in Europe.

So, we’re fairly comfortable with it.

Rajeev Gupta

Sulabh, this is Rajeev again.

You may have seen, of course, our SEBI financials and tried to compare the other expenses for any variability.

To clarify, in this quarter, there are lower Q1 FY24 Earnings Call July 18, 2023 subcontracting costs and of course, a lower legal cost as well and nothing to do in relation to the SWC business.

Again, I just wanted to add because it’s more like-to-like.

I hope that clarifies your points on other expense.

Moderator · Conference Operator

Thank you.

We have the next question from the line of Nitin Padmanabhan from Investec.

Please go ahead.

Nitin Padmanabhan

So, when you look at the SWC business on the numbers that we have reported, is the Q4 to Q1 dip the usual sort of seasonality in the business.

And typically, if you could give some color in terms of typically what's the sort of the mix between first half and second half, how does it normally look?

Amit Chadha

Rajeev, do you want to take that?

Rajeev Gupta

Sure.

So, Nitin, to your point, yes, this business is seasonal in nature.

Typically, you will see H2 to be better off compared to H1.

In terms of mix of business, you will see H2 to be at 60% vs H1 at 40%.

So that's the reason we say that you tend to see H2 to be better off compared to H1.

Nitin Padmanabhan

Sure.

And the variability from Q4 to Q1 that we have seen this time, is there a common feature of this business?

Or do you think as we – you spoke about, I think, one $30M and three $10M deals, as these deals keep adding up, that should sort of come off?

How should we think about it at least as we go over the next 12 to 24 months?

Rajeev Gupta

2 points here.

One, the point that I made that H2 is better than H1, and hence, you're seeing that Q4 had better off revenue for SWC when compared to Q1. That's one.

Second, when you compare Q1 of this year to Q1 of last year, in fact, we have done better, right?

I hope that clarifies your point, Nitin.

Moderator · Conference Operator

Thank you.

The next question is from the line of Vimal Gohil from Alchemy Capital Management.

Please go ahead.

Vimal Gohil

My question on SWC has been answered.

Second question is on the industry per se.

We have seen a lot of influx or a lot of news on lot of global companies setting up GCCs in India.

And there has been news of a lot of aggressive hiring from them.

How do we participate in this particular trend?

Do we partner with them in this entire process of setting up their centers?

Or do we look at these GCCs as our potential competition?

Amit Chadha

Sure.

Vimal, thank you.

So, I'm part of the – I just joined the NASSCOM Executive Council and the only ER&D company member on the council other than gentleman who's been co-opted from the ER&D council.

So here, GCCs are an opportunity.

If I look back and I look at the number of STEM graduates coming out of colleges in India, it's huge.

It's more than 2 million people coming out per year in STEM, right?

So, they will find their ways to Global Competency Centers (GCCs) Now here's the good news and the silver lining.

All the business that was potentially going up to Ukraine or going up to Russia or going up to other parts of Eastern Europe has started getting Q1 FY24 Earnings Call July 18, 2023 diverted to India.

A significant part of what was being given to China has been given to India.

So, if I look at it, the India pie itself has grown, right?

Second, if you would have talked to me 15 years ago, I would have said they are all competition.

But I've learned, the industry has learned, everybody has learned to co-exist.

In our customer premises, often there are discussions that happen about green badge and red badge or blue badge and red badge.

Blue badge or green badge is their own employees, while red badges are people like us.

They continue to look at – what is core, they will keep; whatever that could be contextual or that was core yesterday could be given to us today.

Additionally, GCCs focused on only their area of focus.

So, an Automotive GCC will focus on Automotive.

Telecom will focus on Telecom.

But if they need cross-vertical domain expertise, they will not be able to deliver that.

For example, I've been executing a number of connectivity projects for a lot of my Auto customers who have their centers here, but I work with their teams in Europe and US, and they give me work directly, right?

So that cross-vertical domain expertise that we bring is not there with GCCs because they are single cylinder focused.

Lastly, the fact to be considered is that the world is moving to a lot more fixed price, consolidated work kind of model.

So therefore, we are the gainers there because they look at us and they actually let us deliver on an envelope basis rather than worrying about attrition etc. So, I do welcome GCCs being here.

We've been hiring from them.

They've been hiring from us.

It's a two-way street.

I do welcome the whole ecosystem being built up in India because overall, it adds to the fundamentals of the ER&D business and companies like us.

Vimal Gohil

Amit, just a follow-up to that.

How do you look at our cost structure versus the GCC cost structure?

Is there a significant differential for our potential customers to say that the Indian ER&D service providers like us still have a better edge in terms of executing projects at a much better cost efficiency versus them doing within their captive or in-house?

Amit Chadha

Vimal, 2 things here actually.

Number one is that GCCs, their cost structures are higher than us.

That's clearly the case.

One, they work on a cost center model, and we work on a profit center model, right.

Two, because they are single cylinder, they can't offer a lot of career growth or job enrichment to their software engineers or hardware engineers, etc., because they have to do the same work, and in our case, we are able to provide that.

So, I will not say we pay less, our cost structures are lower.

But if I look at the total package of what we would be able to offer to our engineers, which is career growth, which is job enrichment, which is job rotation, plus customer interactions, is something that we are able to provide that are not there in an in-house setup.

So, we do believe that's there.

But having said that, I again will reiterate, together we are creating an ecosystem that is good for India and good for sourcing from India.

Moderator · Conference Operator

Thank you.

The next question is from the line of Ravi Menon from Macquarie.

Please go ahead.

Q1 FY24 Earnings Call July 18, 2023

Ravi Menon

I just want to check on the growth in North America.

It looks like we've seen some good revenue addition there.

It's almost as good as what we saw last year.

So, what were the things that came in well this quarter.

Rajeev Gupta

Ravi, Rajeev here, I'll take this one.

So, it's more relative in terms of when you look at the growth for North America, and that's probably because we have restated the SWC financials in Q1 as well as in Q4. And because SWC is a cyclical business, you're seeing, of course, Q1 to be lower relative to Q4. And consequently, the proportion of business that you see shows a growth in North America when compared, right?

So, it's just relative.

That's what I would say, Ravi.

Ravi Menon

And Amit, on the semiconductor, we are starting to see the decision cycle get better.

So, I want to check, but you also said that you don't know if it's probably one quarter pain or more than one quarter.

So, could you just explain that?

Amit Chadha

I'll answer it 2 ways, right?

I will share but I will then request my colleague, Alind, to add to what he's seeing in the market as well.

One, from a Semcon standpoint, there is a little bit of pain that's there in terms of, you know, they are shifting; consumer electronic devices are not being sold so much, so the demand is not there.

They are all trying to switch to data center chips and AI chips today.

All of a sudden, AI is the only word they use, everybody uses, right, including all of us.

So therefore, there's a shift happening, in fact, and we see that spend coming.

Now will that come in a quarter, will it be 2 quarters?

To be seen.

I would request Alind to add on the color of the market as he sees today in North America.

Alind Saxena

So, we have worked with more than one Semcon companies.

Totally if you look at about 4 or 5 Semcon companies.

If you look at the trajectory, which is broadly driven by AI and then by default the requirements that the data center for them to be up and running, we see that continuing.

There are chips which are going to come in markets which are going to change fundamentally the way that compute is going to happen.

We are lucky that we are involved in quite a few of them.

We do believe that in about a quarter's time, we will see the growth trajectory come back up again, and we are confident of the progress there.

Ravi Menon

And are you using those downturns or semiconductor to deepen your capabilities in any areas, any white spaces maybe in the analog side or anything else where you think you lack?

Amit Chadha

So, it's Amit again.

From a capability standpoint, I do believe that we have capability across the spectrum.

We are working towards -- in fact, we've executed projects now on 7 nanometer (7 nm) chip as well, and we continue to work on different areas and are tying up with this global ecosystem as well.

So, we just have to start; some of these have to get signed off and start.

Moderator · Conference Operator

Thank you.

The next question is from the line of Sandeep Shah from Equirus Securities.

Please go ahead.

Sandeep Shah

My first question is, last time in the Q4 earnings call, we said that more than 20% constant currency growth and the organic growth would be more than 10%.

Whether that assumption Q1 FY24 Earnings Call July 18, 2023 changed?

Or do you expect that growth could be slightly higher in the case of SWC calculation because the first quarter run rate for SWC on YoY has been healthy.

So, whether the 10% plus organic growth guidance still stand?

Amit Chadha

Sandeep, thank you.

So, the way we look at it is, number one, as you've seen in the numbers, we have reported SWC mostly in the Telecom segment, right?

Because operationally, we have integrated.

I mean there are leaders from our SWC family that today are responsible for 2 of our centers in India, execution centers.

There are leaders, senior leaders from the LTTS heritage side, that are responsible for the nexGen communication business, which has been integrated between both of them.

So, we do commit to that 20% plus constant currency, and we are watchful that we won't sign lower margin deals and that has been a conscious effort.

And shall I say, cadence developed in the last 3 months in the company to ensure that.

I'm confirming 20% plus constant currency, H2 better than H1.

And broadly, the split will be what we have told you.

Sandeep Shah

Okay.

So organic growth will also be more than 10%?

Amit Chadha

At this stage, 20% plus, yes, organic 10% plus and that's where we are.

But you should know that both teams have merged and integrated.

Moderator · Conference Operator

Thank you.

The next question is from the line of Bhavik Mehta from JPMorgan.

Please go ahead.

Bhavik Mehta

Just one question from my side.

Just going back to the guidance, how should we look at the mix of growth within your portfolio?

Do you expect all verticals to show strong growth going forward, or do you think that some verticals will do better than the others and hence they will do the heavy lifting to offset weakness in maybe some other verticals.

Just a color on that would be helpful.

Amit Chadha

Sure.

In fact, I'm going to answer this in 2 ways if I may.

One, I'm going to give you an industry view and then I'm going to ask my colleague here, Abhishek, to talk to you about what we are doing in SDV and AI because that's a huge path forward for us.

So, from an industry standpoint and growth standpoint, I do believe that Transportation will continue the strong growth we've had because of the differentiated story of EV that we have created and the early investments in SDV that we are doing.

When it comes to Industrial Products, given the fact that we are seeing deal closures happening for us in digital as well as software platforms and people discussing AI in a very interesting manner for shop floor application for us.

We believe that growth for that will continue, not maybe at the same rate of Transportation, but better than what we have done this quarter.

We do see the growth continuing.

Plant, we do see the growth coming back next quarter and then continuing from there.

Our backlog is fairly strong, and people continue to call us for designing of newer plants, expansion, Q1 FY24 Earnings Call July 18, 2023 etc., and with this outpost we are creating in the US which has already been staffed, we are very confident that it will grow.

Now the two areas that I am a little conservative about – one is Hitech, even though nexGen communication will continue to grow given 5G cybersecurity, I don't know how long the pain in Semcon and Consumer Electronics will continue.

I do believe it's a quarter off, but we don't know.

So that's something that I'm a little concerned about at this stage and cautious is the right word.

And finally, in Medical, we've had some good traction, some very nice dialogue around connected platforms, QARA, AI.

But it's, again, how much do they want to give and do in the same quarter is to be seen.

So that's where we broadly see it.

I would invite my colleague Abhishek, to talk a little bit about investments we are making in AI and SDV that will help us in terms of growth as we move forward.

Abhishek Sinha

Yes.

Thanks, Amit.

So clearly, with our customers, Amit earlier mentioned about the Advisory Council, we are clearly seeing SDV, AI and Cybersecurity as the 3 legs – where we see a lot of investments are coming in.

The good news is, from a timing perspective – the SWC acquisition that we made the whole NGC, next-gen communication skills that comes through that and the cybersecurity area are a direct fitment into the SDV space.

And why I say that is because if you look at the software kind of vehicle architecture, a lot of it is a high compute architecture and what that means is the skills that come from 5G, internet and such areas are directly relevant for the way the vehicles are going to be designed.

And interestingly, cybersecurity is a sweet spot for us because vehicle SOC is something that need automotive skills and deep cybersecurity skills, and this acquisition gives us both in a very nice way.

And that is probably going to be one of the key differentiators as we get into the space.

I mean as we speak, we're already doing at least 4 or 5 SDV programs for most of the customers in Europe right now, and we see a decent pipeline on the SDV front.

Coming to AI, our sweet spot there is going to be Manufacturing, Automotive and Medical.

Here also, I think the domain expertise that we bring to the table – it's very clear that AI is not just going to be about technology, it's about domain as well, and our deep domain expertise in these areas definitely helps us take some good strides ahead.

So we will be, of course, focusing on these 3 segments.

But apart from that, the investments we have done over the last couple of years – we have patents on some AI-specific solutions as well.

That should help us.

The work we do with hyperscalers, Semcon partners, I think this is a great recipe for different domain segments coming together to provide domain-specific AI solutions to customers.

In both these areas, we are investing big time in internal trainings and the partnerships with various entities in the ecosystem itself.

And you will definitely hear more from us in the coming quarters on these areas.

Moderator · Conference Operator

Thank you.

The next question is from the line of Rohan Nagpal from Helios Capital Management, India.

Please go ahead.

Q1 FY24 Earnings Call July 18, 2023

Rohan Nagpal

One quick question on your India business, notice that there is a significant reduction in the -- there's about a $10M reduction in your India business.

Is it just on account of SWC seasonality or what is going on here?

Amit Chadha

Yes, that's largely SWC.

I don't see it another way.

Rohan Nagpal

Okay.

And then one of the things you mentioned was the deals that you've signed have already gone in for execution, they’re fairly swift.

Could you provide some color on the timeline of deals in terms of what is the typical timeline from signing to execution?

And some color on the pipeline that you're currently seeing?

Amit Chadha

Sure.

When it comes to the deals that we signed, the $50M deal was something that we had been pursuing for more than about 4 months.

And it took time and, we were waiting, we were investing and waiting, right?

And it took a lot of decision, approval, etc., to go through with that, but it's already moved to execution, and we have gone live.

Now the other 5 deals that are there, the $10M+ deals, they have all gone into execution, I want to confirm, towards the last week of June, right, and ramping up as we speak and should get to steady state sometime in this quarter.

So, we are continuing to work on those.

Now as an example, one of the Hitech deals that we signed, $10M+, not the $50M+, that took us 3 months multiple meetings to sign.

So, what we have done as a team is that we've improved our funnel.

We've increased the number of deals that we are chasing.

We have hired more salespeople.

They are on the ground and leaders as well.

And I believe that, therefore, we are comfortable with the fact that we'll have to put in more effort to be able to do this.

The moment the deal gets signed, right, the ramp up is fairly immediate.

So, these are not long-term that they'll take 6 months, 9 months to do.

Ramp up is immediate.

Therefore, we've beefed up our recruitment engine as well as well as Abhishek is very passionate about the Global Engineering Academy, which is also running full time to make sure that we are able to repurpose people, turn them around, etc. In fact, in one of the deals that we signed, which was not a 1$0M deal because it's a shorter period, we had invested in hiring and holding about 100+ resources for some period, and they have gone live now and billing.

So, some of that training upfront, before execution, is required.

And we have more deals on the back of these that we are working on, we will continue to update you as we close them.

Moderator · Conference Operator

Thank you.

The next question is from the line of Mihir Manohar from Carnelian Asset Advisors.

Please go ahead.

Mihir Manohar

Sir, largely wanted to understand on the synergy, which is the SWC acquisition.

So, which are the internal KPIs that we are tracking?

And how are we progressing on those KPIs -- that internal KPIs, that will be really helpful.

My second question was on the deal pipeline.

I mean, you mentioned the deal pipeline is quite strong, has improved materially.

So, if you can quantify what is the QoQ or a YoY improvement in deal pipeline that will be really helpful.

Q1 FY24 Earnings Call July 18, 2023 And specifically, which are the areas where you are seeing good deal pipeline in that context?

And my last question was just on the external environment.

I mean you are appearing to be more optimistic on the external environment when compared to your earlier commentaries.

So, if you can throw some more color, I mean is the external environment worry just behind us?

And how do you see the external environment per se?

Yes.

So those were the questions.

Rajeev Gupta

So, this is Rajeev here.

Let me take the part on the synergies from SWC acquisition.

So, we've, of course, briefed this earlier as well – 3 areas that we are working towards.

The integration did conclude as of April 1, 2023, so both the companies are now together.

And we are reporting SWC under our Telecom & Hitech segment.

In terms of synergies, 3 areas: First, internationalization of revenue.

Amit did talk about that we've beefed up our sales leaders in U.S., in Europe, in Middle East.

And clearly, the idea is to build pipeline.

Some of that progress indeed has happened.

Second is in terms of improving the EBIT margin.

SWC has been a lower margin business, more so because most of the revenue has been India-based, right?

And of course, taking it international will help us getting comparable margins much like our heritage business.

Third is in terms of improving DSO.

DSO because the deals that we're executing in India are deals that are like -- are with the government entities.

So, as we do deals with global customers, we will see DSO terms closer to what we have in heritage LTTS business.

These are the 3 areas.

We'll continue to update.

We did mention that our aspiration in terms of the combined EBIT margin is 17% levels.

In terms of DSO, the range that we maintained combined is between 115 to 117 and we will continue to update on that.

Of course, Amit did reiterate in terms of the growth aspiration, which is 20% plus, including the SWC acquisition.

Amit, do you want to take the second one?

Amit Chadha

Sure pipeline – where and its external environment.

If I look at external environment, the fact that we are in 5 segments is what gives us confidence when one goes down, another goes up; It is a portfolio.

That's point number one.

Number two, being an end-to-end engineering provider from mechanical to hydraulic electrical to plant engineering to digital skills, and in that across the track from VLSI to hardware to software, firmware – all that gives us the confidence that we are fairly in the right place.

Now having said that, I'll tell you where the problem is.

One, the problem is that some of these deals that we are talking about, and we have chunkier deals like the $50M that we closed in our pipeline.

So, the number of $50M+ deals, the $25M+ deals for us at this stage is higher than it was last quarter, or same quarter last year.

That is driven Q1 FY24 Earnings Call July 18, 2023 by the fact that some of the investments we made in EV, some of the investments we made in digital manufacturing, some of the investments that we made in VLSI capabilities and digital skills is coming to bear.

Now, so that’s what gives us the confidence.

Now the issue is, firstly, instead of 2 signatures, deals are taking 4 signatures.

The reality, I will not shy away.

I will acknowledge it.

I mean I should tell you the number of miles that Alind or even Rajeev, Abhishek, our HR head Lakshmanan, is putting on in the last 2 quarters is much higher than they would have traveled over the last year because clients need that reconfirmation from the entire management team and not just one or two people, right.

Secondly, in Semcon and Consumer Electronics, like I said, there's a little bit of pain left.

I cannot quantify for you how long, but that's the reality.

Third, any project that doesn't have a profit pool or a revenue pool associated and is being done for the love of mankind or womankind is getting delayed.

So, these are 3 realities that are there.

But having said that, we continue to be agile.

We continue to look at various areas like I requested Abhishek to talk about today on SDV and AI.

We are thinking ahead of the market, and I believe that these investments will carry us forward.

Moderator · Conference Operator

Thank you.

The next question is from the line of Aniket Kulkarni from BMSPL Capital.

Please go ahead.

Aniket Kulkarni

Yes.

So just a small question from my side.

It is regarding the ROE number which you are doing right now.

So, are we comfortable at these numbers?

Or is there any specific bracket where we want to be going forward?

Rajeev Gupta

Aniket, this is Rajeev here.

So of course, you may be looking at ROE at a quarter level, but we certainly try to aspire for an annualized number.

At this stage, we are comfortable in terms of the ROE, where we are or rather where we ended for FY23. The aspiration certainly is to improve at the back of 18% EBIT margins by Q1 FY26. So, we believe over the period of these next 5-6 quarters, we should be able to improve the ROE.

But at this stage, we are comfortable with where it is.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, we will take that as a last question for today.

I would now like to hand the conference over to Mr. Pinku Pappan for closing comments.

Over to you, sir.

Pinku Pappan

Thank you all for joining us on the call today.

We hope we were able to answer most of your queries and happy to do follow-ups with you through the quarter.

With that, we're signing off from this quarter's call and have a good day and wish you all a great day ahead.

Thanks.

Moderator · Conference Operator

Thank you.

On behalf of L&T Technology Services Limited, that concludes this conference.

Thank you for joining us.

You may now disconnect your lines.

Note

This transcript has been lightly edited for clarity and accuracy.