L&T Technology Services Limited (LTTS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q4 FY '25 Conference Call of L&T Technology Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandesh Naik, Head of Investor Relations. Please go ahead.

Thank you, Ryan. Hello, everyone. I'm Sandesh and welcome you all to the earnings call of L&T Technology Services for the fourth quarter of FY '25. Our financial results, investor release and press release have been filed on the stock exchanges and are also available on our website, www.ltts.com. I hope you have had a chance to go through them. This call is for 60 minutes. We will first start with the management remarks, which would be for about 20 minutes, and then open up for Q&A. The audio recording of this call will be available on our website approximately 1 hour after the call ends. With that, let me introduce you to the leadership team present on this call. We have with us Amit Chadha, CEO and MD; Abhishek Sinha, Executive Director and President; Alind Saxena, Executive Director and President; and Rajeev Gupta, CFO. We will begin with Amit providing an overview of the company performance and outlook followed by Rajeev, who will walk you through the financial performance. I now invite Amit for his opening remarks.

Perfect. Thank you, Sandesh, and thank you all for joining us on the call on a busy results day today. You'll have to bear with me with my voice today. I have a little bit of a throat infection but I'll try and do my best. We hit 3 major milestones during the quarter, crossed INR 10,000 crores in annual revenue in rupee terms. With this, the company has an annualized run rate of $1.4 billion. Registered highest ever large deal TCV bookings, higher than Q3 as well, which was a record for us in itself. Surpassed 1,500 patents filing till date. Coming to quarter 4 results and highlights. Even in a tough market environment, we had a third straight quarter of sequential organic and overall growth in quarter 4 FY '25. Industry-leading revenue growth in USD was up 10.7% led by Tech and Sustainability segments. Continuing from Q3, our large deal momentum recorded the highest ever TCV bookings, including one $80 million-plus deal, one $50 million-plus deal along with $30 million plus one deal, $20 million plus one deal and three USD 10 million-plus deals. Order inflow, as I look at it on these large deals alone, is up quarter-on-quarter more than 25%. Half of these deals were won against competition reflecting our growing market share based on our differentiated offerings, which we had invested in during the first half of the year; AI, Gen AI and other technologies. We had anticipated better revenue growth in quarter 4, however, during the quarter, the overall macroeconomic created -- environment created unexpected headwinds for us. A, few of the large deals we won saw delay in ramp-ups and signing of some large deals got deferred to the end of the quarter. As you're aware, we announced 1 deal on the 31st of March as well. Second, in order to support select strategic customers, some of our proprietary software solutions and niche engineering work, which was done, had to be done on an investment basis. We believe this will help us in strengthening our case for larger deals in the future, building bigger market share, wallet share as well as growing these accounts further. There are some of these agreements -- soft agreements we have based on this. Lastly, the EBIT was 13.2% for the quarter. Three aspects here: this had the impact of Intelliswift integration during quarter 4 as we had shared in the previous earnings call, the higher growth in SWC revenue and finally, additional costs on supporting customers and related investments that I just talked about earlier. We continue to focus on levers to manage our operations effectively. Now for the full year FY '25. In FY '25, we delivered a growth of 8.9% in constant currency. As per analyst reports, India Inc. has been growing at 6%. So we're broadly happy that your company has grown higher than industry. Sustainability grew 5.7%, Mobility grew 9.3% despite a challenging year while Tech including Intelliswift grew 11.3% in CC terms USD. Europe led the charge recording the strongest growth of above 21% for us. All other geos showed positive growth. Large deals: In FY '25 we closed a total of 32 deals greater than $10 million; one of them $80 million, three $50 million, five $30 million to $50 million range, and ten in the $15 million to $25 million range. All in all, fairly satisfied with what we've been able to close. I do expect this deal momentum to continue. Technology, we are proud that we surpassed 1,500 patents filing in FY '25 cumulatively, including 573 filed for LTTS and 929 on behalf of our customers. Of these, 190 patents are in the AI and Gen AI domain alone reflecting our focus on advanced technology. With an average of 50 patents added each quarter, our total filing for FY '25 now stands at 206. NVIDIA invited and partnered with LTTS across 3 areas: Rail; MedTech; and smart spaces. At NVIDIA GTC, LTTS showcased TrackEi, an AI-powered railway inspection track tool using NVIDIA Jetson for real-time defect detection and predictive maintenance. TrackEi also won the Etihad Rail Innovation Award this quarter. In MedTech, the focus is on diagnostic imaging and surgical equipment. In smart spaces, LTTS leveraged its advanced AI fusion platform to set up an integrated command and control center at Maha Kumbh, which enhancing the experience of over 660 million pilgrims. M&A, we have successfully integrated Intelliswift, allowing us to build a strong portfolio in hyperscalers to address adjacent -- and adjacent markets in service-led verticals like retail, fintech and healthcare. As I go forward into the following quarters, I will start reporting progress first on solutions and then on deals in retail, fintech and healthcare to you as well. Let me provide you segmental performance and outlook now. Mobility segment showed resilience with revenues flat in this quarter to previous like we had guided you in the last quarter. A year ago we showcased iDrive, our framework for SDVs. We also launched hyper-personalization and AI for driver experience, all of which resonated with our clients at CES. Such investments are paying off for us, not just auto and T&OH as well. We continue to focus on winning large deals in technology areas like SDV, hybrid and AI. Recently we won a notable EUR 50 million deal, which we announced on 31st March, with a European OEM on SDV and expect such deals -- more such deals in the coming quarters from U.S. and Europe. We believe that overall Mobility segment will stay muted in the immediate term and will witness a turnaround towards the end of Q2. Coming to Sustainability. Sustainability did well with a 2% Q-on-Q growth in revenues. Higher growth was tapered due to an unexpected delay in ramp-up of deals signed but are now all set to grow in the coming year, including April. Companies are realigning their supply chains with a clear focus on leveraging advanced engineering solutions. This includes initiatives like predictive maintenance, real-time asset performance management and leveraging sensor-driven analytics and industrial AI, all underpinned by LTTS strength in plant engineering and industrial products. This we believe will help us in growing the Sustainability segment faster in FY '26 as compared to FY '25. In plant engineering, we continue to see strong demand in ONG and CPG led by CapEx projects, plant modernization, digital twins. Key clients to ramp up with us is a large deal in ONG. We were chosen by a European oilfield supplier as a preferred engineering supplier to support green energy initiatives. We also expanded our engagement with an ONG major for engineering and enterprise asset management. CPG continues to spend and we have created differentiated solutions in that space. We see strong demand for greenfield and brownfield projects in plant modernization, digitization and safety. In Feb, we introduced RefineryNext, a solution aimed at transforming traditional refineries into sustainable intelligent and highly efficient operations. RefineryNext integrates advanced AI-driven tools for predictive maintenance, intelligent asset management and demand forecasting along with energy optimization and net carbon compliance. Moving on to industrial. We are seeing larger deals being aimed and a robust pipeline of deals going ahead because of our differentiated offering in industrial machinery, building technology, electrical power and controls. The focus areas will be energy and automation, semiconductor machinery, data centers and motion and robotics. Nearly half the large deals TCV signed in this quarter are in the industrial products subsegment, which is one of our most profitable subsegments. This quarter we signed our largest deal in industrial products to date, $80 million plus digital engineering transformation deal with a manufacturer of industrial products and solutions. We marked a decade of engineering excellence with Siemens to drive innovation with the creation of integrated digital twins for products and plants. Overall, for the Sustainability segment, we see an increased large deal pipeline and expect the growth momentum to be better than Q4 with both industrial and plant subsegment firing at the same time. Finally, moving on to Tech. Tech showed the strongest growth, 28% Q-on-Q in revenues led by Smart World, organic software and platform subsegment. Additionally, there was an upside of integration of Intelliswift revenues for the quarter. Excluding Intelliswift, Tech still had the highest growth amongst all the segments. The software and platforms did well with growth in both hyperscalers and key service industry accounts in healthcare, fintech and retail. We are starting to gain traction with at least, I would say, about 45 senior level meetings done across the Intelliswift portfolio in the last quarter alone. The feedback and response has been extremely positive and encouraging. The communication, media and consumer tech sectors are experiencing significant transformation driven by advancements in AI and immersive technologies. In the MedTech subsegment, demand is being driven by QARA and digital manufacturing and sustenance engineering. Overall, we expect MedTech software platforms to do well along with Intelliswift in the coming year. Now let me discuss the outlook for FY '26. The ongoing rejigging of tariff-based supply chain dynamics presents significant opportunities for LTTS to drive growth and deliver enhanced value of its clients. With AI adoption accelerating in the software-defined everything in the digital domains, both are core strengths of LTTS, and some of these rejig offerings that we had done in H1 and capabilities will serve as a key differentiator in securing large high impact deals. With Q3 and Q4 having consecutively seen the highest large deal TCV wins so far, we are encouraged by the large deal TCV pipeline that we have built so far. We continue to see market share gain across our top accounts. We have multiple $100 million deals, $50 million deals running in advanced stages of negotiation and hope to take them to conclusion in the coming quarters. I will confirm that quarter 1 looks to be like a quarter 4 in terms of deal wins as well at this stage. At the same time, we have to bear in mind the uncertain market environment and tightening demand conditions, which is causing disruption in the shorter term but will be beneficial for the ER&D industry over the medium to long term. To conclude, we believe our go deeper to scale strategy with our diversified portfolio of 3 segments; Mobility, Sustainability and Tech; gives us a balanced approach to the market and not limited to 1 segment. This gives us the confidence of overall growth even in turbulent times. We expect FY '26 to be a better year than FY '25. I'm confirming double-digit revenue growth in USD CC terms for FY '26. I would also like to reaffirm our medium-term outlook of $2 billion of revenue. With that, let me thank you for all your support, encouragement through the year. I now hand over to Rajeev from here. Thank you.

Thank you, Amit. Greetings to all of you. Let me start by saying that we had many positives in quarter 4 of FY '25 and for the year FY '25. Quarter 4 FY '25 saw record highest ever deal wins as mentioned by Amit. FY '25 revenue crossed INR 10,000 crores milestone. Our metrics in terms of DSO and free cash flows for FY '25 continued to improve. Finally, acquisition of Intelliswift and integration during quarter 4 FY '25, which of course is in line with our strategy to build capabilities in software and platforms capability for hyperscalers. With that, I will take you through the financial details of quarter 4 and for the year FY '25. Beginning with quarter 4 FY '25 financials. Our revenue for the quarter was INR 2,982 crores, a growth of 12.4% on sequential basis. Our year-on-year growth for the quarter came in at 17.5%. EBIT margins for quarter 4 came in at 13.2%. Let me walk you through the EBIT movement in this quarter. First, consolidation of Intelliswift financials had an impact of roughly 150 basis points on the EBIT margins. We had called this out in our quarter 3 commentary as well. Macro-related headwinds in the quarter impacted anticipated revenues leading to impact on EBIT margins, especially in higher margin segments such as Sustainability and Mobility. We did absorb cost to support select strategic customers during these tough market conditions. We firmly believe this will further strengthen our partnership with the customers. Moving to FY '25 financials. Our revenue was INR 10,670 crores, a growth of 10.6% over FY '24. We saw balanced growth across our diversified segments. EBIT margin for the year came in at 14.9%. Let me explain the EBIT evolution for FY '25. We did make investments during H1 of FY '25 to augment our solutions and capabilities for new-edge technologies and also strengthen leadership across our new segments; Mobility, Sustainability and Tech. This indeed helped us to win record large deals in H2 FY '25. And as Amit mentioned, we continue to see stronger pipeline and lot more $50 million-plus deals that we pursue. Second, the acquisition of Intelliswift had an impact on EBIT margins. Finally, macro-related headwinds in quarter 4 had an unexpected impact on FY '25 margins. Moving to below EBIT. Other income for the quarter came in at INR 33 crores resulting from consolidation of facilities leading to benefits on ROU. Effective tax rate for quarter 4 FY '25 was 27.4% and for FY '25 at 27.4% as well. This is within our expectation of 27.5%. Net income for the quarter stood at INR 311 crores, which is 10% -- 10.4% of revenue. For FY '25, net income came in at INR 1,267 crores, which is at 11.9% of revenue. Moving to balance sheet. Let me now highlight some of the key line items. Our quarter 4 combined DSO, including unbilled, continued to improve and came in at 106 days compared to 112 days in quarter 3, an improvement of 6 days. Q4 unbilled came in at 18 days, similar levels as quarter 3. We have improved upon this metric compared to our target range of 110 to 115 days. Talking about cash flows. In FY '25 free cash flows came in at INR 1,379 crores versus INR 1,251 crores in FY '24, an all-time high in absolute terms and a healthy 109% of net income. Our cash and investments improved to INR 2,976 crores end of FY '25 versus INR 2,883 crores end of FY '24. This is after paying for Intelliswift acquisition. On capital return, the Board today recommended a final dividend of INR 38 per share taking the total dividend for FY '25 to INR 55 per share translating to a dividend payout of 46% for FY '25. Our return on equity stands at 22% for FY '25. Moving to revenue metrics. On a sequential basis, our dollar revenue growth was 10.7% in reported terms mainly driven by 27.9% sequential growth in Tech segment. Talking about segmental margin performance for quarter 4 FY '25. Mobility segment margins remained flat in line with revenue growth. Sustainability margins declined majorly due to absorption of cost to support select strategic customers. Tech segment margins have been impacted primarily due to Intelliswift consolidation, cyclical growth of SWC business and lower than anticipated revenues due to ongoing headwinds. Moving to operational metrics for the quarter. The offshore mix came in at 55.8%, compared to -- compared to quarter 3 due to Intelliswift consolidation. We aspire to improve this ratio to 60% levels in the medium term. The fixed price revenue mix was 39.9% in quarter 4 FY '25. Client profile, which is active number of clients, which went up by 43% due to Intelliswift acquisition. The categories of $20 million and $1 million-plus accounts have shown an improvement in quarter 4 FY '25. Client contribution to revenue in quarter 4 FY '25 continues to be in similar range as compared to quarter 3 of FY '25. We expect revenue from top customers to improve going forward as our targeted client mining programs come to fruition. Headcount improved sequentially by 793 to 24,258 as of year-end. This is mainly on account of consolidation with Intelliswift. Attrition remained range bound at 14.3% levels. Realized rupee for quarter 4 was around INR 86.41 to the dollar, a depreciation of 1.6% versus quarter 3. Before I conclude, let me provide visibility on margin trajectory going forward. With the ongoing headwinds from tariffs and macro-related uncertainties, we remain cautiously optimistic for the next few quarters though we are quite bullish in terms of our deal wins. Amit already talked about record deal wins in Q4. Q3 also we saw very healthy deal wins. Q1 also we are expecting to see similar levels of healthy deal wins. We will continue to pivot on revenue growth to gain market share while leveraging on operational efficiency for margin improvement. And reiterate our aspiration of improving EBIT margins to mid-16% levels between quarter 4 FY '27 and quarter 1 FY '28. I thank all of you for your support and your cooperation. With that, I hand over to the moderator for Q&A.

[Operator Instructions] The first question comes from the line of Yogesh Aggarwal from HSBC.

Just couple of questions. Firstly, a few clarifications. Sorry if I have missed. So in the quarter, you added $33 million incremental revenues. How much was from Intelliswift?

What's your second question? We'll answer it together.

Okay. The second, Amit, is that for the -- I mean it's related to, the margin impact itself because it looks like the 150 basis point was if the full quarter integration was there. Just to clarify on that. The other thing is on the organic growth for the guidance for next year double digit. Does that include Intelliswift as well because that would mean that 7%, 8% growth would come from there itself? So that's the question.

Yogesh, this is Rajeev here. Let me take the first question and I'll request -- I'll take the first 2 question and I'll request Amit to take the question on guidance. So your question was the increase, how much of that really is coming from Intelliswift, right? So we did clarify in our quarter 3 commentary that Intelliswift is an business -- annualized business of $100 million. Of course we continue to work towards growing that business. So hopefully, that answers the question. We are not splitting the revenues between LTTS and Intelliswift. We report that as consolidated.

So the full quarter -- the full quarter came in fourth quarter?

Yes. You are seeing the full quarter include Intelliswift barring a few days. Technically, the conclusion of the transaction happened on January 3. It played out the full quarter, if you may see. Second, in terms of margin dilution. Yes, I did call it out in the quarter 3 commentary as well. We saw roughly about 150 basis point of margin dilution on account of Intelliswift consolidation. Having said that, we are working actively on the integration plan and expect to see synergies both in terms of revenue and cost play out in the next following quarters.

Now in terms of growth, yes, we have called out double digit and we do still believe that with the storm coming or with the storm ongoing, the world has stopped giving guidance and saying where they will go and it seems to be misty. But having said that, with the backlog of deals that we have got, in addition to that, the strong deals win we have had in the last 2 quarters, we believe double-digit growth is assured. Now where will that double digit fall is something to be seen. It's not 10%, it's definitely greater than that but where will it be, we will talk about it as we progress. And yes, a part of that will come from Intelli and a part of that will come from others.

Right. Sorry, just clarification. Since Rajeev said the full quarter was integrated, were you a bit disappointed with the fourth quarter organic growth? I think you did mention some few deals got pushed down. So is that impacted? Because I think we were expecting a bit better growth in the fourth quarter organic.

Yes. Like if you would have heard my commentary, paid attention to it, I said clearly that in Q4 there were, I'll quote again, few large deals. One saw a delay in ramp-ups and signing of deals were deferred to the end of the quarter. We in order to select -- support select strategic customers, some of our proprietary solutions and niche work was done on an investment basis rather than on a chargeable basis to the customer in order to create good relationships and get larger access to bigger deals in the future. I hope that answers your question.

The next question comes from the line of Karan Uppal from PhillipCapital India.

Just the question is on next quarter. So in FY '25, we saw SWC seasonality leading to a weaker Q1, so revenue declined 3%. So are you expecting in FY '26 also the quantum to be similar and then the growth to pick up in rest of the year? That's the first question.

Karan, what's your second question? I'll answer it together.

Second question is to Rajeev. So Rajeev, hi-tech margins have come up significantly. You explained that it's because of Intelliswift integration. So should we assume this to be the base for hi-tech vertical margins? And any color in terms of segmental margins, how those will evolve in FY '26? That would be helpful.

Sure. So let me take the first one, Karan. It's a very good question. Karan, I can confirm we don't want to give quarter-on-quarter guidance like some peer companies do. But I want to give you indicatively at this stage, Sustainability will definitely grow quarter-on-quarter. Software and platforms and which includes organic plus inorganic from Intelli will grow quarter-on-quarter. MedTech will grow quarter-on-quarter. Mobility will -- I think will grow as well as it looks right now. The seasonality of Smart World is there but we are trying to beat it if we can. Let's see as the quarter goes, how it comes along. It will not be as bad as it was last year. We are trying to minimize it, but that is where I will stop. The quarter to be played out, a lot of work to be done. Rajeev, you want to answer on margins?

Sure. Karan, as far as the margin, I think first, like you -- I've highlighted, right, and of course I think you read that, the hi-tech margins had the impact of Intelliswift acquisition roughly about 150 basis points. Second, it also had the cyclical growth of Smart World, right? Now to answer further to your question in terms of where do I see the baseline in terms of the EBITDA margins for each of the segments, I would request that we kind of wait for about a quarter as things are settling down. We called out a few headwinds, right? One of course that there were a few large deals that we anticipated to start early in the quarter, but it kind of got deferred towards latter part of the quarter. Second, we are continuing to support some of our strategic customers. While we're quoting that as investments, we believe that will strengthen our relationships to have even larger deals from those customers. So allow us a quarter till we continue to clarify and see some of this evolve there.

[Operator Instructions] The next question comes from the line of Bhavik Mehta from JPMorgan.

So couple of questions. Firstly, on all these large deals, which we have been winning in 3Q and 4Q, how should we think about the ramp-up of those deals over the next couple of quarters? Because in 4Q we saw some delays in ramp-ups but how things have changed if you look at April? And how should we expect the trend going forward from a next couple of quarters' perspective? And secondly, on margins, Rajeev, how should we think about the wage hike this time around? Which quarter will you see the impact of that?

Bhavik, as far as deal ramp-ups is concerned, the ones that we won in Q3 have all ramped up now and will provide us revenue in Q1 and beyond. Other than the one that we won on 31st March, the other deals have also started ramping up and should provide us positive revenues in quarter 1. The reason I'm confident about Sustainability growing faster than quarter 4 is because I know that, that is in full flow. Mobility is where we've been seeing challenges. We had expected a little more growth in Mobility but some of these deals got delayed. And I expect that Mobility should be either flat or grow but no more degrowth as far as I can see it right now. So that's the only question. In Tech again, we've been impaneled in a couple of places. Three of the hyperscalers now are almost $20 million-plus accounts for us in an annualized run rate basis. So I believe that growth to carry on because Tech is still pumped up about spending on AI and others, very relevant to what we are doing. Seasonality of SWC is there, but we are trying to overcome that. So as we go forward, we do believe that we should be able to continue the path that we are on right now.

Bhavik, let me take the wage hike question. So see, we are cautiously optimistic. I think Amit highlighted a lot of large deal wins. Of course we'd like to see the ongoing headwinds to settle down in this quarter. As a management, we have yet not made any decision in terms of wage hike. I think that's something that will play out during the quarter depending on how we see the macro uncertainty kind of settle down.

In fact, we just gave wage hikes in November, Bhavik. So the appraisal process has started but we haven't made a decision on when to deliver the hikes in CY '25.

The next question comes from the line of Moez Chandani from AMBIT Capital.

I had 3 questions. Firstly, in terms of the large deals that you've signed, is there any change in terms of pricing or timelines for these deals versus the deals that you were signing, let's say, 2 or 3 quarters ago? That's the first question. Secondly, when it comes to geography, in your conversations with clients, is there any particular geography that you're seeing is worse impacted by these macro headwinds, particularly from North America versus Europe? And just thirdly and my last question, your onsite mix has seen a sharp increase this quarter. Is this just because of the Intelliswift acquisition or has there been any other strategic shift in terms of your onsite/offshore revenue mix?

So as far as large deals is concerned, Moez, we are seeing probably the same kind of deal making that we saw in the past. Just that clients are coming in and asking for better efficiencies, leveraging AI and spot solutions that we have got. So in fact a significant part of the deal wins we've had this year quarter and last quarter have been baking in our own solutions and therefore, providing productivity benefits to the customer and keeping some of those as well, right? So that is what we have seen. Now these unusual requests that came for investments in quarter 4 and in fact came in the last week of the quarter from 2 to 3 of our strategic customers, we have not seen this in the past. We had seen it during COVID as well. So they came in, which we have obliged. But we don't think this is an ongoing thing. Things should from here on I think be okay. Third, in terms of geography you talked about, there is a lot of consolidation deals still running in Europe that we've got. The U.S. has got more new tech digital transformation kind of deals running. So that's the broad contours. Lastly, we are starting to get a number of inquiries for plant transfer, for line transfer, for operational technology support, for creating servitization of people's product lines as well as support on the China Plus One strategy where we are providing them sourcing support as well. So that is a new kind of stuff that we've been seeing coming in as inquiries in the last, shall I say, 6 weeks.

Your question on onsite. This is Rajeev, let me address to it. Yes, majorly it's on account of Intelliswift, partly on account of some of the large deals that tend to start where we do work onsite and then we see it moving more towards offshore. But majorly it's on account of Intelliswift consolidation.

The next question comes from the line of Ashish Aggarwal from Sundaram AMC.

I hope I'm audible. Sir, 2 questions from my side. First of all, on the guidance given the deal signings tailwind we are seeing both in Q3, Q4 and as you said in Q1, assuming there is no major macro headwind now from here on apart from what we have seen, is it fair to assume that organically FY '26 will be, if not better, similar to FY '25? That's my first question. And secondly, on the comment you have made about the investments you have made and some of the software proprietary solutions, et cetera, right, which have been provided to the clients. At a later stage, are these reimbursements from the clients or these are the investments you have already made and this will not be reimbursed from the clients?

Number one, I would like to confirm to you that I do believe organically FY '26 will be a better year than FY '25 if the other shoe doesn't fall tomorrow. Look, I'm being honest, right? And that's how we are preparing, that's how we are adding. We're adding 2,500 freshers. The first lot of 500 will join in June towards the end. So we are on it, right? So nothing changes for us. We are preparing for a growth year. Now your second question was -- I'm sorry, can you repeat your second question?

The investment -- the preferred item of reimbursement.

Go it, got it. Look, the way it is in one particular case, it was investments that we had made and we had implemented the product for them, the widget for them, and there was a certain money owed to us and they came back and said that rather than paying you, can you say that this is goodwill generated for us. We're using it across our entire product family and at some point we will make you hold and we need support. In a second case, there was a niche solution that we had developed and worked on, which again was going to be billed on 31st March. We were requested to not invoice and again take it as part of our investment for the relationship. So we have agreed to both of these and taken it forward. So we don't see this ongoing but this is a one-off that we had to accept. We believe this will help us in greater market share. It is in times of these when you support a client that they remember it and then they come back and support you when you need it. I do believe that this will help us in growing our accounts, in growing our relationships and getting larger deals.

[Operator Instructions] We do have a follow-up question from Bhavik Mehta from JPMorgan.

So going back to the investments related to clients, is it fair to assume that the revenues to an extent should also come back because you were requested not to bill them last quarter. So could that be a tailwind in 1Q or 2Q?

Yes, Bhavik. May not be on the same deal but other places, yes. Yes.

Okay. And just again going back to the guidance because you said it's double digit, it's not 10%, it will be more than 10%. Is it fair to assume that 10% is like the worst case you're working with right now?

Bhavik, I request you, you've known us for a long time. Let us say 10% and I'm saying it's not -- sorry, I'm saying double digit. I'm saying better than FY '25, '26 will be better and that's where it is. And I don't think it's 10%. So let me leave it there. Of course this will be better.

[Operator Instructions] There is a follow-up question from the line of Karan Uppal from PhillipCapital India.

So Amit, just wanted to double click on Mobility vertical. So in this vertical we have seen 1 large deal of $50 million in SDV space and you also mentioned that there are further deals in SDV, which you are seeing in the pipeline. So fair to assume that within Mobility, auto is doing well but you are seeing pain in aero and off-highway?

That's not true, Karan. In fact we've seen across -- see, there are stops in certain places. But overall, we do believe that we've got this differentiated set. My colleague, Alind, can add.

So I'm sure, Karan, you are looking at the markets, you are aware of how our customers are doing there, whether they are in the automotive or in trucks and off-highway or in aero. So the pain is there. What we do believe is that this is going to last for about a quarter or so like we said earlier. But given the solutions and some of the deep relationships that we have and the deals that we have won, part of which we talked about are consolidation deals, some are carve-out deals which are there. We do believe that the growth will come back sooner rather than later in this sector. But still to be washed out and barring anything else happening, we do remain very bullish about this segment and we'll continue to perform as we go along.

[Operator Instructions] The next question comes from the line of Sulabh Govila from Morgan Stanley.

So firstly, I wanted to check, I'm not sure if you've quantified what's the sort of impact on revenue this quarter from the investment that you did at the end of the quarter in terms of in the couple of clients that you mentioned?

Sulabh, this is Rajeev. Let me take that one. So we will not break it down, Sulabh. We've of course clarified that look, we did see an upside from the Intelliswift acquisition, we've seen a few headwinds. We will not break it down to that level. But what I will suggest is if you can have an offline conversation with Sandesh.

Sure. Understood. And is it fair to assume -- similarly on margins, is it fair to assume that when the revenue comes back, the margin also comes back given that it was just the lack of this revenue that led to the margin weakness?

Prima facie, yes, Sulabh, that's how it is. And aside of this, I mean we are also running a very targeted margin improvement plan now in the organization. We are conscious that of course we didn't see these levels of headwinds, right? They all came in beginning of February. So we are running a lot of efforts to sustain margins going forward, sustain and improve as well.

Okay. Understood. And then I wanted to just double-click on a comment that Alind just made that we see growth coming back in Mobility sooner than later. I just wanted to understand what sort of data points or what sort of conversations you're having with clients that are making you believe that, that could be the case?

So like I said earlier, we have talked about some of the deals that we have already won earlier in the quarter. And then we have some more transformation deals, which are running, which we hope to close sooner rather than later. And that's the confidence that we have based on our relationship with our customers that they will go through and that will lead to the growth that we are talking about.

Okay. Okay. No, my question was more from a perspective of the pause or the stops that are there in certain places that those getting lifted, if there is a conversation regarding that with the clients?

See, that's a broader market question. What we are seeing is -- and again this is available in public forums. You can find out that some of the programs that our customers are running, they are getting delayed so they're getting pushed out by about a year or so. And hence, the trajectory of the efforts required to bring them to fruition automatically goes down. So that we will see plus the ambiguity that remains because of tariffs and the cost that the customers will have to take as they go through. So those ambiguities do remain but they also lead to opportunity of consolidation, they lead to opportunity of picking up some of these transformation deals that we are talking about and that's what we are riding upon. We do see that this will remain -- the market as such will remain ambiguous for about another quarter or so. Probably towards the end of second quarter of the financial year, we believe that this will start settling down.

Understood. Understood. And then just the last bit for me. Amit, we sort of mentioned on order inflow that half of the order inflow that we got this quarter were won against competition. So assuming half of these are consolidation deals, is it fair to assume that these come in at a lower margin than the company average?

No. In fact when I said won against competition, these were I said 70% of the deals were won in a competitive manner based on solutions we had, right, 30% were single source to us. That's what I meant by that. I would like to confirm to you that all the deals we have won in quarter 4 as well as the deals we have won in quarter 3 are at standard segmental margins in which they have been won.

Thank you. Ladies and gentlemen, we have reached to the end of the question-and-answer session. I now hand the conference over to Mr. Sandesh Naik for his closing comments.

Thank you. Thank you all for joining us on the call today. We hope we were able to answer your queries. If there are any follow-ups, we'll be happy to address them. With that, we are signing off for today and look forward to interacting with you through the quarter. And I wish all of you a very good evening and a good day. Thank you.

Thank you. On behalf of L&T Technology Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.