LTTS, Tata Elxsi, Zensar Technologies to share Q2 results today. Things to watch out

A handful of IT firms including L&T Technology Services Ltd (LTTS), Tata Elxsi Ltd and Zensar Technologies Ltd will be announcing their September quarter results today. Among them, Zensar Technologies is seen reporting doubling of profit on year-on-year basis. The rest two are seen logging 8-11 per cent jump in bottom line growth.

HDFC Institutional Equities expects Zensar Technologies to report a 140 per cent YoY rise in net profit at Rs 137 crore on a 0.4 per cent rise in net sales at Rs 1,239 crore. Dollar revenue is seen at $150 million, up 0.6 per cent QoQ. Ebit margin is estimated at 13.4 per cent, down 188 basis points QoQ but up 887 basis points YoY.

Hi-Tech, Consumer and Manufacturing verticals will remain under pressure, said Motilal Oswal Securities. It expects revenues to grow 0.4 per cent QoQ CC, supported by BFS vertical.

"We expect a sharp decline in margins, 260 bps QoQ, primarily due to the wage hike. However, we expect that cost-control measures will partially offset this impact in Q2," the brokerage said adding that the order book should look better than that of last year.

LTTS is seen porting 8.8 per cent YoY rise in profit at Rs 307 crore on 18.8 per cent YoY rise in sales at Rs 2,371 crore, HDFC Institutional Equities said. Sales in dollar terms is seen rising 2.5 per cent YoY to $287 million. Ebit margin is seen at 16.3 per cent, down 88 basis points QoQ and 176 per cent on YoY basis. LTTS is seen retaining its double-digit organic growth outlook.

"Growth driven by momentum in transportation and recovery in plant engineering verticals

party offset by softness in hi-tech end medical verticals," said InCred Equities. This brokerage said wage hike and potential higher contribution QoQ from low-margin SWC acquisition could be key EBIT margin headwinds partly offset by growth leverage and operational efficiency.

This brokerage sees profit for LTTS to grow 10.2 per cent to Rs 3,114 crore on 20 per cent rise in sales at Rs 23,939 crore.

In the case of Tata Elxsi, the Tata group firm is seen reporting 8.6 per cent YoY rise in profit at Rs 189 crore on 14.2 per cent YoY rise in sales at Rs 872 crore, HDFC Institutional Equities said. Ebit margin for this IT firm is seen at 26.2 per cent, down 87 basis points QoQ and 64 basis points YoY. Kotak Institutional Equities expects profit at Rs 186.60 crore, up 7 per cent. It sees sales rising 15.2 per cent YoY to Rs 878.80 crore.

"We expect investor focus on: overall demand outlook in EPD segment; drivers for better growth in 2HFY24E; stability in media & communications vertical; recovery in healthcare & medical devices vertical; progress on scale-up of adjacencies in each of the three focus verticals; sustenance of revenue growth in IDV; medium-term margin aspirations and normalisation of DSO from elevated levels in FY2023," it said.

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