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Informist, Thursday, Jan. 15, 2026

 

By Arya S. Biju

 

MUMBAI – L&T Technology Services Ltd. reported subdued earnings for the December quarter with both its top line and bottom line falling on a sequential basis. The company failed to meet the Street's view for both the top line and bottom line. A double-digit sequential fall in revenue from the company's largest vertical, technology, offset the low-single-digit rise in sales from sustainability and mobility segments, dragging down the company's total sales. The bottom line for the quarter was also hit by a one-time cost of INR 354 million on account of the new labour codes, which came into effect on Nov. 21.

 

The technology company that provides engineering and research and development services reported, on a consolidated basis, a net profit of INR 3.03 billion for the December quarter, down around 8% sequentially and over 6% annually. The net profit was lower than the Street's estimate of INR 3.41 billion. The bottom line fell after rising for two quarters.

 

The new labour codes have resulted in a significant uptick in provisioning for employee benefits on account of recognition of past service costs, the company said. Under the new codes, basic pay must account for at least 50% of an employee's total cost to the company. As a result, payouts tied to statutory contributions such as gratuity and leave-related benefits are set to increase for companies. Excluding the one-time cost due to the new labour codes, the company's consolidated net profit for the quarter is INR 3.38 billion, up around 3% on quarter. This, however, is also less than what analysts had expected.

 

L&T Tech's consolidated revenue for the quarter fell around 2% sequentially to INR 29.24 billion, way below analysts' consensus estimate of INR 30.51 billion. However, year on year, the company's revenue grew over 10%.

 

In dollar terms, L&T Tech's revenue for the reporting quarter fell over 3% sequentially but rose around 5% on year to $326.3 million. In constant currency terms, the company's revenue was down around 3% on a sequential basis but up around 4% annually.

 

The information technology company has revised its guidance for the financial year 2025-26 (Apr-Mar) to a mid-single-digit overall growth. When releasing the earnings for the September quarter, the company had said it aspires for double-digit growth in FY26. While most broking firms had expected the company to retain its growth guidance for FY26, Kotak Securities had expected it to cut the guidance to 8.5-9.0%.

 

The company's earnings before interest and tax for the reporting quarter grew over 7% sequentially and over 1% on year to INR 4.27 billion. Its EBIT margin for the quarter expanded 120 basis points to 14.6% from 13.4% reported in the trailing quarter. This was higher than the EBIT margin of 13.6-14.3% estimated by the Street. "Aligning with our 5-year Lakshya plan, we are doubling down on value-accretive high-growth & high margin areas. This is already yielding results, reflected in a 120 bps QoQ improvement, with Q3 EBIT margins at 14.6%," Amit Chadha, chief executive officer and managing director, said in a press release.

 

The company sustained its momentum in large deal wins, delivering an average total deal contract value of $200 million for five consecutive quarters, Chadha said. Several large deal bookings were recorded in the December quarter, including large deals worth $70 million from a global original equipment manufacturer, along with a $30 million deal, a $20 million programme, and five deals above $10 million, the company said in the release. "In Q3, 50% of the wins were in the Mobility segment, underscoring our leadership in next-generation AI/ML (artificial intelligence and machine learning) technologies that are driving the future of software-defined mobility for our clients," Chadha added.

 

Revenue from the company's technology segment, which contributed around 37% of its total sales, fell 10% on a sequential basis while that from the sustainability segment, which contributed over 33% of total sales, rose 2%. The mobility segment, which contributed around 30% of the company's total sales, showed early signs of improvement despite a seasonally slow quarter, Chadha said. Revenue from this segment grew 0.4% sequentially in the December quarter, recovering somewhat from a 1.4?ll in the trailing quarter.

 

Revenue from the company's operations in North America, which contributed around 57% of total sales, grew around 1% sequentially in the December quarter. On the other hand, revenue from Europe and India, which contributed around 18?ch to total sales in the reporting quarter, fell around 2% and over 18%, respectively.

 

On the expenditure side, the company's costs related to employee benefits rose around 3% on quarter and 18% on year to INR 16.43 billion. This expense accounted for 65% of the company's total costs. Other expenses and tax expenses, on the other hand, fell 14% and 10% on quarter to INR 7.67 billion and INR 1.07 billion, respectively. Its total expenditure for the quarter also declined over 3% sequentially to INR 25.11 billion.

 

The company's headcount fell to 23,639 as of Dec. 31 from 23,678 as of Sept. 30. Its last 12 months' voluntary attrition declined to 14.6% as of Dec. 31 from 14.8% at the end of the trailing quarter, but rose from 14.4% a year ago.

 

Wednesday, shares of L&T Tech had closed around 2% lower at INR 4,243.80 on the National Stock Exchange. The equity market is closed Thursday on account of civic elections in Maharashtra. The stock has risen over 2% since the company announced its September-quarter earnings on Oct. 17.  End

 

US$1 = INR 90.29

 

Edited by Rajeev Pai

 

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