L&T Tech, Zensar express caution after Sep quarter

livemint.com:

NEW DELHI : India’s mid-cap information technology services firms Larsen & Toubro Technology Services and Zensar Technologies expressed caution in their September quarter earnings on Tuesday. While L&T Tech recorded 3.2% sequential revenue growth to $288.1 million in constant currency term, Zensar’s revenue was up 0.2% sequentially to $150.2 million. Despite growing revenues, LTTS slashed its FY24 revenue guidance by 2.5 percentage points to 17.5-18.5%, from 20% in April.

All the companies expressed caution, and a conservative outlook for the rest of the fiscal year. “While longer-term trends for engineering, research and development remain strong, in the short term we are seeing long decision cycles and incremental headwinds from macro-economic stress in various geographies. We revise our dollar revenue growth guidance for FY24 to 17.5%- 18.5% in constant currency," Amit Chadha, managing director and chief executive of LTTS, said in a press statement.

LTTS posted 10bps decline in operating margin to 17.1%. Profit after tax increased 1.4% sequentially to ₹315.4 crore, while headcount rose by 488 to 23,880. Attrition dropped 2.1 percentage points to 16.7%.

One basis point (bps) is one-hundredth of one percentage point. LTTS only reports revenue in dollar terms. Zensar reported a 70bps rise in operating margin to 23.5%, while PAT rose 10.6% sequentially to $21 million.

Net headcount declined marginally to 10,330, while attrition saw a 2.8 percentage points drop to 13.1% in September quarter. The overall performance of midcap IT services segment primarily mimics the cautious approach set out by the three largest Indian IT services providers—TCS, Infosys and HCL Technologies, which reported their earnings last week. TCS does