BENGALURU (Reuters) – Indian engineering research and development services provider L&T Technology Services retained its full-year revenue growth forecast of 8%-10% but missed quarterly revenue expectations on Thursday due to prolonged weakness in its key U.S. market.
The company’s revenue grew about 7% to 24.62 billion rupees ($294.4 million) for the three months ending June 30, missing analysts’ expectations of 25.31 billion rupees, per LSEG data.
The United States is L&T Technology’s largest market, constituting nearly 53% of its revenue. The company’s revenue from the North America market fell 1.4% in the quarter.
Revenue in its Indian and European segments rose 12.2% and 23.7%, respectively.
The company won seven orders totalling $100 million in the June quarter, nearly flat from a year ago.
Indian technology exporters have grappled with sluggish demand through the last fiscal year as clients focused on cost cuts to counter higher interest rates. L&T Technology’s revenue in financial year 2024 rose 9.4%, its slowest full-year revenue growth since it fell in fiscal year 2021.
While the impact was felt across the sector, research and development firms such as L&T Technology, which counts aircraft engine suppliers and automobile makers as its clients, were less affected than IT services companies.
However, analysts believe the worst is over for the technology sector.
Companies in the sector, which earn a significant share of revenue from the United States, stand to benefit from increased client spending due to likely interest rate cuts in the world’s biggest economy later this year, according to analysts.
Last week, L&T Technology’s bigger peers Tata Consultancy Services and HCLTech marginally beat revenue estimates.
While HCLTech projected growth, TCS said it is “too early” to predict sustained growth in future quarters.
Infosys, India’s No.2 IT services exporter, raised its full-year growth forecast and beat its first-quarter revenue estimates earlier in the day.
($1 = 83.6292 Indian rupees)
(Reporting by Varun Hebbalalu in Bengaluru; Editing by Sonia Cheema)
