L&T aims to grow IT & Tech services revenue to high teens by 2026

The group will also be entering new-age businesses that it has incubated, such as L&T EduTech and L&T SuFin, a B2B e-commerce platform for industrial and construction products

Engineering giant Larsen & Toubro (L&T) is aiming to grow the Information Technology (IT) services and technology services (TS) revenue contribution to the group to high teens by 2026, said the company in its FY22 annual report.

“The IT&TS businesses will continue to balance the risk and cyclicality associated with the traditional projects and manufacturing segment. The momentum from existing and emerging tech trends such as Cloud, Digital, AI, Industry 4.0 is expected to propel growth in the near term. This portfolio will aim at revenue growth in the high teens during the Plan period and be vigilant to tap opportunities for inorganic growth as they emerge,” said S N Subrahmanyan, CEO & MD, L&T in his letter to shareholders in the annual report.

The IT&TS portfolio includes Mindtree, L&T Infotech and L&T Technology Services. A few months back, L&T had announced a plan to merge Mindtree and L&T Infotech, the process of which has already begun.

This growth of the tech services portfolio is part of the group's Lakhsya 2026 strategy, which has three focus areas--EPC projects, hi-tech manufacturing and services.

“Our thrust areas in the plan period are clear: Ensure sustainable growth in the current business portfolio through profitable expansion and execution, scale up through business model innovation and meet customer demands in an agile manner in the newer businesses. This should help us clock Group Revenues of R2.7 trillion and an RoE of 18 per cent-plus by FY 2025-26,” he stated.

Other than IT services and engineering services, the group will also be entering new-age businesses that it has incubated. These include L&T EduTech and L&T SuFin, a B2B ecommerce platform for industrial and construction products. Besides, there is the already announced entry into data centre and cloud services businesses.    

The company added that the IT&TS segment remains one of the fastest growing businesses at the group. The L&T group posted a revenue of Rs 156,521 crore during FY 2021-22, up 15.1 per cent YoY. The growth was mainly achieved with a pickup in the execution momentum at project businesses and substantial growth in IT&TS.

The recently announced numbers of all the three tech services firms also show continued momentum of strong growth. For instance, Mindtree reported its highest TCV at $570 million and a revenue growth of 36.2 per cent YoY and 7.7 per cent sequentially in Q1FY23. This was the sixth straight quarter of 5 per cent revenue growth.

Likewise, LTI’s revenue grew 30.62 per cent to Rs 4,522.8 crore (up 5.14 per cent QoQ). It also signed four big deals and a TCV of $79 million. The highlight of the quarter was that both companies closed a large deal together.