Larsen Toubro Infotech Ltd (L&T Infotech) is one of the IT majors in India. The company ranks in top 6 IT-BPM players of India. Also read our analysis of IT-BPM Industry (Click to read).
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- L&T Infotech Executive Management
- Shareholding Pattern
- L & T Infotech Solutions & Services Revenue
- L & T Infotech growth of IT Services & Solutions Revenue
- Revenue as per Business Verticals
- Growth of Business Verticals
- Geographic Revenue Segments
- Digital Business of L&T Infotech
- Client classification
- Employee Strength of L&T Infotech
- Recent acquisitions & partnerships of L&T Infotech
- L&T Infotech Business Outlook
- Key Financial Parameters
(A) Executive Management
(i) A.M. Naik – Group Chairman – Age 78 years
Mr. Anil Manibhai Naik joined L&T as a Junior Engineer in 1965. He rapidly rose to positions of increasing responsibility as he moved from General Manager to MD & CEO. Eventually, leading to his appointment as Chairman & Managing Director on December 29, 2003. Effective April 2012, the Board of Directors extended Mr. Naik’s tenure as Group Executive Chairman.
Under his leadership, L&T expanded its portfolio in diversified fields like defense, nuclear power, aerospace, infrastructure, water and effluent treatment, hydrocarbon, financials services. Also, ventured into new age businesses like information technology & engineering services.
(ii) Mr Sanjay Jalona – CEO & Managing Director – Age 51 years
He joined the company in 2015. Prior to joining L&T Infotech he held the position of EVP & Global Head of High-Tech, Manufacturing and Engineering Services business at Infosys. In Infosys, he held various leadership positions for 15 years. He also worked with Gemplus & Wipro. Mr Sanjay holds engineering degree from BITS Pilani.
The company also completed 6 acquisitions under his leadership, including – AugmentIQ Data Sciences Pvt. Ltd., an innovative start-up offering IP-based, big data and analytics solutions; Luxembourg based Syncordis S.A., a leading core banking implementation services provider; Ruletronics, a boutique Pega consulting company; N+P, a Temenos consulting company based in Germany; Lastly, Lymbyc, an AI and advanced analytics focused company, and Powerup, a fast-growing cloud consulting company.
His remuneration for FY19 is Rs. 21.03 crore & Rs. 13.97 crore for FY18.
(iii) Mr. Sudhir Chaturvedi – WTD & President – Sales – Age 49 years
He holds engineering degree from Pune University as well as double MBAs in Marketing and Finance from Symbiosis Institute of Business Management in Pune and from Leeds University in UK. Mr. Sudhir has over 25 years of industry experience across Sales, Business Development, Consulting and Delivery Operations. He spent more than 13 years at Infosys in various leadership positions.
He joined L&T Infotech in 2016. Prior to LTI, he was the Chief Operating Officer at NIIT Technologies where he was responsible for worldwide sales and delivery for technology and business services.
His remuneration for FY19 is Rs. 10.80 crore & Rs. 9.75 crore for FY18.
Total managerial remuneration for FY19 is Rs. 39.57 crore.
(B) Shareholding Pattern
Larsen and Toubro Ltd holds 74.53% shareholding as on 31 March 2020. Mutual Funds hold 5.30%, FPI shareholding is 9.46% insurance companies’ shareholding is 1.41%. Moreover, Mr A. M. Naik holds 1.04% of the shares as on 31 March 2020.
(C) Business Segments of L&T Infotech Ltd
(i) Revenue segments as per IT Services & Solutions
ADM & Testing:
Application data management (ADM) is a technology-enabled business structure in which business and IT work together to ensure the uniformity, accuracy, stewardship, governance, semantic consistency and accountability for data in a business application or suite, such as ERP, custom-made or core banking. The company makes new applications or expand the existing client’s applications. For this purpose, L&T infotech holds strong alliances with global technology giants like SAP, Oracle, Microsoft, IBM, as well as niche IT service providers.
L&T Infotech also offers Oracle, SAP, Salesforce, Microsoft Dynamics 365, Maximo, JD Edwards as enterprise solutions, being implementation business partner.
Infrastructure Management Services
LTI supports the global IT Infrastructure of many Fortune 100 companies. Solutions include cloud solution to transform clients’ existing data center in partnership with other IT developers, Operations management platform, Infrastructure security platform among others.
Analytics, AI & Cognitive
L&T Infotech’s main platform is Mosaic for digital IT services. It is a platform to weave all digital solutions together in a digital architect kind of a way to make sense of the disparate technologies that are available. Thus, the platform offers data engineering, advanced analytics, knowledge-led automation, IoT connectivity & helps deliver pioneering Analytics solutions.
Enterprise Integration & Engineering
Includes offerings like API Management and Microservices, Cloud Integration, digital transformation strategy by implementing a scalable & distributed architecture, Digitizing business processes by integrating heterogeneous applications in a single backbone.
Platform Based Solutions
Company’s offering includes platforms named – Mosaic, Unitrax, REDaxis, iCEOn, Advanced Smart City Operating Platform and RapidAdopt. Each platform features distinct capabilities. For instance, Unitrax is LTI Canada’s flagship product – a SaaS-based solution which is an investor record-keeping system, engineered for the Canadian financial services industry.
(ii) Growth of IT services & solutions revenue
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*For FY17, Enterprise Integration & mobility revenue is not reported separately but included in Analytics, AI & Cognitive revenue.
(iii) Revenue as per Business Verticals of L&T Infotech
*BFS= Banking & Financial Services
*CPG= Consumer Packaged Goods
(iv) Growth of revenue of Business Verticals
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(v) Revenue by Geography
(D) Digital Revenue of L&T Infotech
40.30% of the company’s revenue is from digital business. This ratio was 26% for FY17.
L&T Infotech builds its digital capabilities with ‘Mosaic’ platform. Mosaic is enabled by underlying platforms –
- For intelligent devices – Mosaic Things
- Smarter execution – Mosaic Automation
- Impactful decision-making – Mosaic Decisions
- Unmatched customer experience – Mosaic Experience
- Problem-solving – Mosaic AI
(E) Client Contribution to Revenue
L&T Infotech has 424 clients as on 31 March 2020 as against 343 as 31 March 2019. The company’ client count as on 31 March 2017 was around 250. More than 95% revenue is from existing clients each year.
L&T Infotech performance for first half of FY20 remained slow due to cut down of IT budgets by 2-3 accounts. The company foresees challenges ahead in BFS, Insurance and also Oil & Gas segments.
(F) Employee Strength of L&T Infotech
L&T Infotech employee strength increased from around 20,000 in FY17 to 31,437 employees for the year ended 31 March 2020. The count also includes employees of the acquired entities during these years.
Company’s effort mix is 21.5% onsite & 78.5% offshore as on 31 March 2020. On the other hand, revenue mix is 50.9% onsite and 49.1% offshore.
(G) Acquisitions & Partnerships
The major acquisitions of L&T Infotech over last 4 years focused on strengthening the following areas:
- Firstly, its Mosaic platform
- Secondly, Two acquisitions to get a very strong capability in core banking on top of Temenos as a platform.
- Also, Digital business capabilities with ‘Pega Systems’.
- Lastly, Analytics solutions with Artificial Intelligence led platform by ‘Lymbyc’.
- In July 2016: L&T Infotech announced a strategic partnership with GE Digital combining LTI’s diverse industrial capabilities with GE’s Predix cloud-based operating system for the Industrial Internet. Thus, LTI and GE Digital collaborated to develop innovative digital-industrial solutions powered by Predix analytics.
- August 2016: Further, L&T Infotech became Pega Registered Business Partner, enabling it to provide Pega software expertise & implementation services to its clients. The partnership included delivering advanced Business Process Management (BPM) & Business Process Automation (BPA) solutions that optimize efficiencies.
- August 2016: The company also announced a strategic partnership with Coupa, a leader in cloud-based spend management and procurement software platform. This partnership will enable enterprises to rationalize spends, achieve measurable savings, control costs as well as improve cash management.
- Sept 2016: Also, the company announced a collaboration with Oracle to develop & market solutions based on the Oracle Internet of Things (IoT) Cloud Service. The companies are working together on innovative cloud solutions to help manufacturing, utilities & construction companies digitize business processes and improve operational efficiencies.
- October 2016: Moreover, L&T Infotech acquired a startup named AugmentIQ Data Sciences Pvt Ltd. It is IP-based, big data & analytics solutions. The revenue of the entity amounted to Rs. 2.40 crore for FY16. The consideration was in cash Rs. 7 crore.
- October 2017: L&T Infotech announced strategic implementation partnership with Apttus which is Quote-to-Cash software company headquartered in San Mateo, CA. Partnership focused on enabling digital transformation initiatives of global customers. The partnership covers clients in financial services, oil & gas, manufacturing as well as media & entertainment.
- November 2017: In addition, Company signed definitive agreements to acquire Syncordis S.A., headquartered in Luxembourg. The acquired company provides business and IT consultancy services as a pure play core banking ‘Temenos’ implementation specialist. The acquisition made in cash for consideration of Euro 14.65 million.
- Moreover, in December 2017, L&T Infotech announced collaboration with Microsoft to offer L&T Infotech block-chain based trade finance solution.
- June 2018: The company announced availability of its Digital Engineering & Construction Solution on SAP Cloud Platform.
- Jan 2019: L&T Infotech also announced its partnership with ACCORD (the global data standards-setting body for the insurance industry) to develop a comprehensive set of digital standards & solutions for the Insurance industry.
- Jan 2019: In addition, the company signed a definitive agreement on January 16, 2019 to acquire Ruletronics Limited (UK), Ruletronics Systems Inc. (US) and Ruletronics Systems Pvt Ltd (India).
The acquired entity is a boutique Pega consulting company with customers in banking, insurance, healthcare and retail verticals.
The purpose being to strengthen rapidly growing digital business with suit of capabilities in ‘Pega’ implementation. It was all cash acquisition with consideration of USD 7.48 million.
- Feb 2019: The company signed a definitive agreement to acquire Nielsen+Partner Unternehmensberater GmbH headquartered in Hamburg, Germany along with its identified subsidiaries. The acquired entity is an approved Temenos partner. The company further aimed to strengthen its services around digital banking platforms to customers across Banking and Financial services segment. The acquisition amounted to Euro 28 million.
- May 2019: Syncordis S.A., company’s wholly owned subsidiary, announced a strategic global partnership with ‘Temenos’. Thus, enabling Syncordis to seamlessly offer an array of Temenos certified services to banks across the globe.
- July 2019: Further, the company announced to acquire Lymbyc Solutions Pvt Ltd, headquartered in Bangalore. The acquisition amounted to INR 380 million.
Lymbyc has an Al led predictive insights platform. It is driven by an adaptive machine learning engine providing differentiated analytics solutions to clients across industry segments.
- Oct 2019: Moreover, the company acquired PowerupCloud Technologies Pvt Ltd. The acquired entity is an AWS Premier Consulting partner with capabilities in Cloud Consulting, migration, cloud native application development and managed services. PowerupCloud also specializes in Azure and GCP Cloud platforms. The cash consideration amounted to USD 15 million.
- For FY21, management is confident over ramp up of deals won during 2nd half of FY20. In Q4 FY20, company announced 2 large deal wins with total estimated contracted value of USD 113 million. One deal is with a Government Ministry for digital transformation. The other deal on the other hand, is with an European retail client for managing IT applications & infrastructure.
- Also, during Q3 FY20, management announced three large deals this quarter with net-new total contract value of US$100 million. Each of the 3 deals are in North America, Europe and Asian geography.
- Till FY20, management’s guidance on sustainable margin remained 14-15%
- For FY21, management did not provide margin guidance.
- Also, the Management does not provide top line growth guidance.
- Management aims to grow its top line on the basis of deal wins & acquisitions capabilities with a sustainable margin percentage.
- Also, company’s digital business growth expects to bring higher realizations. This is led by opportunities in cloud initiatives, work from home operations.
- The overall IT-BPM Industry (click to view detailed report) expects a slowdown in growth of Banking, Financial services, Insurance, manufacturing & other diverse segments. Impact may be due to cut down in IT spend budgets forced by current social & economic conditions post COVID-19 pandemic.
- Similarly, L&T Infotech foresees biggest challenges in overall slowdown of BFSI segment, manufacturing companies and oil & gas. Oil & gas segments also gets impacted due to steep fall in oil price.
- Consumer packaged goods and retail segments shall not be impacted much.
- Fundamental business models for IT services had been shaken during COVID-19 crisis and work from home would be part of the future of IT services.
- Further growth is dependent on clients transforming to cloud infrastructure & requirement of strong digital IT services.
Other Risk factors:
- Changes in immigration policies of countries where the company has significant business may affect ability to position consultants at client locations.
- Also, Rapid change in technologies with digital market marks a need for fast realignment to new technologies and business models, failure to which may impact business growth.
- Data Privacy Issues
- Moreover, Geopolitical & Economic conditions of the countries to which the company provides services & solutions.
(I) Key Financial Parameters
(i) Sales Trend
(ii) Margin Expansion
(iii) Free Cash Flow
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References: Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.
Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.