L&T Tech realigns focus to reach $1-bn revenue target

L&T made its stock market debut at Rs 920 per share, 7% more than its issue price of Rs 860

As L&T Technologies seeks to touch $1 billion in revenue by 2021, it plans to focus on its top 30 clients, who contribute about 65 per cent of revenues.

“From a strategy point of view, we have decided not to invest in tail accounts, which are not growing and where we can’t make investments,” Keshab Panda, chief executive and managing director of L&T Technology Services, told Business Standard. “We have identified priority areas in terms of technology and vertical segments.”

“The top 30 customers contribute 65 per cent of our business and have a lot more opportunities for us to grow, provided we have the right technology, engineers and geographical presence. I would be spending more time on these areas,” he said.

The company, which clocked annual revenue of around Rs 3,000 crore ($450 million) in financial year 2015-16, generates about 51 per cent of its business from three verticals — process engineering, industrial products and medical devices. Its top 30 clients are Fortune 500 companies, including Eaton, BMW, Rockwell Automation, P&G, Shell, UTC, John Deere and Calsonic Kanseer.

According to L&T Group Chairman A M Naik, the company is targeting a 15 per cent increase in revenue to $525 million (around Rs 3,502 crore) in the current financial year and wants to double revenue to $1 billion over the next three-four years.

Remaining bullish about demand and growth, Panda said the company will grow more than the industry.

The global engineering addressable market is about $365 billion (around Rs 24.35 lakh crore), of which only $67 billion (about Rs 4.46 lakh crore) has been tapped. The Indian engineering, research and development services market, which reached $20 billion in 2015, is expected to touch $38 billion (about Rs 2.53 lakh crore) by 2020, growing at a compound annual growth rate of 13.7 per cent.

The other important area that the company plans to continue investing in is innovation and talent acquisition.

“Innovation depends on our young engineers. Right now, we have 9,400 employees, I started with 1,400 (in 2010) and we have added about 8,000 engineers over five years, more engineers than what L&T has,” he said.

The company made its stock market debut at Rs 920 per share, seven per cent more than its issue price of Rs 860. The Rs 894-crore issue, which opened for subscription between September 12 and 15, was subscribed 2.52 times.