L&T Technology Services Limited analyst Q&A

Thank you very much. We will now begin the Q&A session. Our first question comes from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.

Thanks for taking my question and wishing the team a very Happy New Year. Amit and Rajeev, I have a few questions with a few more some questions. So, I will squeeze in as many as I can. Just wanted to understand the nature of this restructuring exercise that we have taken. Is it like they are some of the clients for which we have stopped doing the projects? Is it some of the divisions that we have basically kind of shut down and we will not be taking any more projects in that domain? And also, if I look at, basically breakup of this, I think it appears to be that the major restructuring has happened in the Tech segment and in the India business. So, would it be fair to say that the large part of it or predominantly this is the SWC business that we have acquired that we are kind of closing down because that is also leading to an improvement in margins?

Sure. So, first of all, thank you so much and wish you a Happy New Year as well. So, let me step back and talk a little about what's happening. See, what's happening is there are huge capex spends that are happening in the Data center build-up and the Energy build-up area in the US and that is creating follow-up opportunities in the Hyperscalers. It is creating opportunity in the Tech Infra business, in our area, in the Semcon area as well as , in IP because for Data center build-out you need al l those things and then finally, partly in Plant. So, it's a cross -vertical tailwind, if I may. Second, we are seeing re-industrialization of the US. Third, people are moving from AI f or enterprise to actually physical, digital plus industrial, which we are calling Engineering Intelligence. So, when we looked at all that and we looked at our bets, we said that we need to narrow our focus into specific areas that will give us extraordinary growth and leap forward as opposed to areas that may be lukewarm in growth and lower in margins. So, we balanced all of that and we said we don't want to play in a commoditized business tomorrow where you can do copy-paste and cut-paste. We want to be people that are known for technology and we want to look ahead so we don't get into a problem in the future. And then we knew that with our business that we were at, we were comfortable with this double-digit guidance that we had given you and we were at that trajectory. So, we spoke to our board as well and the guidance was that if there is stuff that doesn't make sense and is getting commoditized, start looking at seeing if you want to rationalize it. So, with that said, what we have done is there is parts in our business that we were doing in a Tech segment in Israel that we have taken and we have now closed that down. There was business in parts of Europe in very small area of Mobility, a little bit in Tech, again, which was old technology and we knew that the next step would be deep discounts, etc. So, we shut that down as well. And third, then we looked at US - a couple of US clients that were operating on projects - that were on older technology, where we were counting the revenue actually from India because the PO was from India. So, we took that also and we have taken that out as well, including shutting down the lab, providing the equipment back to the customer. And then there was a little bit of revenue that was coming from Indian customers that was not adding value. So, we did not accept new orders in that area. So, all put all that together is what we have done before as we stand today. So, that was the question, right?

So, is it fair to say given that we have seen a very sharp decline in the India business and in the Tech vertical that a major part of this restructure exercise would be in the SWC business?

No, Vibhor, I would not land that case. I would say it is, Vibhor, it is a lot of, in fact, a lot of it is POs that were being routed to India on Tech labs, etc., that we have taken out. And, you know, look at the other part that I talked about, Middle East, Europe. And there are these orders that we would have otherwise taken. But we said, there is no point taking in empty calories. I'd rather take something that is value-add for the Company. And that is why we decided to let it go. So, it's a mixed portfolio, if I may. In fact, if you remember, we had purchased SWC, there was this Telco-Infra part, Cyber part. So, I am happy to share the Cyber part we have actually won three new contracts, less than $10 Mn, but Cyber contracts in the US. In fact, we were hoping to sign a bigger deal and announce it to you guys. But Christmas came and everybody went merry. So, we will do it in this quarter. So, cyber is growing there. And Tech-Infra, as well in the US, there are newer areas coming up on connecti vity, which we are actively engaged in and growing. In fact, that one operator that we signed has been signed because of the Tech business domain experience that we got from SWC. So, those continue to be the bright spots. In fact, Middle East also, we are there. In fact, I was there in Middle East for three days. And again, going back in Feb, appears to be a promising area for us. I would not come to that conclusion just yet. But this is in play. We expect to finish all of this by March. See, on grounds of prudence, because we could have actually kept quiet and said, we will tell you in March and all that, right? We decided we are a very clear, honest, transparent management team. So, we wanted to in prudence tell you that by the time you end Q4, March end, the floor is you will end up somewhere in the middle digits. And if we are able to win some of this and grow, maybe it will be a little bigger than that. But this is the right time, we thought consciously, to make this pivot on margins, get it to that, like Rajeev said, get to the 16.5% EBIT range, where we also are comfortable and you are also comfortable.

Okay, Amit sir. I really appreciate that gesture. And I think we have discussed it many times. It's good to take a decision which are in the benefit of the long term of the Company rather than focusing on the short-term goals. So, congrats to the entire team for taking this step. Just last couple of questions. So, is the restructuring exercise done or could we see some more steps being taken and some more accounts being closed in Q4 or in the coming quarters?

Got it, got it. And just one last question for Rajeev and then I will leave the floor for the other participants as well. Rajeev, I know this business definitely boosts the margins also. So, going forward, do you expect more margin expansion vis -à-vis because of this restructuring exercise that continues to go or do you think we have kind of plucked most of the fruits of this restructure exercise? And secondly, does this also benefit our DSOs in the coming future and will it also help getting them down as well?

Vibhor, let me respond to both of your questions. So, of course, we have been taking guidance from many of you. So, appreciate that part. The margin improvement will continue and that's the reason I provided guidance of mid 16% levels between a range of Q4 FY27 and Q1 FY28. And there were three factors. Of course, one was because of the Intelliswift acquisition, the integration plan would continue to show margin improvement sequentially as we move forward. That was one. Second of course, this recalibration exercise that Amit largely explained, I think lands in Q3. He's given a view for FY26, but that largely solidifies our ability to grow in portfolios that we think are more futuristic and are profit pools. So, that will also contribute. Third, if you really see, and that's what we talked about earlier, our Sustainability segment and all the large deal wins continue to translate. So, you see growth double digit YoY, you also see improvement in profitability. Of course, that part will continue. But alongside, we are now seeing green shoots in Mobility. So, Mobility, if you look at YoY margins, it's come down EBITDA of about 19% to 20%, it's down to about 15%. We also believe that Mobility will continue to turn around from Q4 onwards. Work to be done, but you will see over the course of next four quarters that the profitability will move and we aspire for that mid 16% range. Second on the DSO, yes, we will continue to improve DSO. Our aspiration is much like on our free cash flow. And I remember some of you posing that question that will be delivered 95%, 90% plus of free cash flows in the year. Indeed, we are delivering in the first nine months. Much like that, we will continue to improve DSO. At the moment, I have given a range of between 110 days to 115 days. Our aspiration is to improve even beyond that. But at least I have given a view for these.

Got it. Great, Rajeev. Thank you. Thank you so much for taking my question and congrats again to the management team for the bold step. Wish you all the best.

Thank you.

Thank you. Our next question comes from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Yes, thanks. Thanks for the opportunity and Happy New Year to all the management team. So, the first question is, Project Lakshya was in place for more than 2 -3 years at a group level. So, why suddenly this exercise versus last three months before we were not thinking about the same? I do agree, this will create a value -added portfolio with a higher margin. But what has led to this? Why I am asking is there has been more than 2 or 3 restructuring exercises which we have carried out in terms of growth strategy in the last 3-4 years. But somehow organic growth is not picking up. So, now with the new restructuring exercise, what will change in terms of changing that organic growth part?

Sure. So, thank you so much. So, if I may provide a little bit color. So, Lakshya is not a 2-3-year program. It's a 5 -year program. It happens every five years. We are, in fact, our first Lakshya was 2010-2011, right up to 2015-2016. Then it was there in 2021 to 2026. And now we will do 2026 to 2031. So, it's a 5-year program. These are not 2-3 year programs. So, that is point number one. Point number two is that we did mention, and I think we talked about it during our investor call or we talked about it in one of those processes that we do five -year programs. So, the next five-year program will start on April 1st, 2026, and go on till March 31st, 2031. So, this is part of the process that we follow. Point number three is that we are, if I look at it, we have restructured or simplified our organization in segments. And we today have six sales teams in North America. We have got four regional teams outside of North America, total 10 teams that allow us the ability to continue to look at deals globally rather than in specific areas. This has actually given us the ability to sign around $200 Mn dollars TCV for five straight quarters. And the wins that we have had in Sustainability, you can see that playing out. You can see Mobility turning around. And in Tech, if I was to include the stuff that we dropped, we have actually grown double-digit. So, we do have organic growth coming along. Now, if we are a Tech company, we have two choices. I could go back and stay in a business that tomorrow will become dilutive, continue to be dilutive in margins and continue to drain away some of the good stuff that is happening in other areas. Or the choice is that before I g et commoditized, I turn around and then do it in advance. Lastly, we have talked to you in advance, and you'll notice that in our calls, we give you some forward views. We normally have views that are between nine to 12 months ahead of the market. So, we do believe that the market is pivoting on AI. They are pivoting to physical, digital, industrial combined AI. And that's why if we don't pivot now, we will be in a problem in nine months' time or 12 months' time. So, this is our first restructuring exercise in this space, in this area. And I would like to acknowledge actually that our teams have done very wel l in terms of being able to identify in the last quarter itself, take action and decisive action which has helped us improve the margins within the quarter. I would have rather done that than come back, lower the revenue, not improve the margins and done i t two quarters down. We have been able to provide decisive action in the same quarter. And from here on, you will continue to see margin improvement as you're seeing. And like I said, we will shut everything off. Whatever we have to do should happen, hopefully by or will happen by March 31 st for our current plan. And your Company, therefore April 1st onwards, continues to focus on EI. Look, our ambition is to become the world's first and biggest EI company in services and solutions. And we will continue to march towards that.

Just a follow-up. In this rationalization exercise, once it's over, one can assume SWC seasonality which leads to volatile growth will now no longer be valid starting next year. And a question to CFO, sir. Sir, we are cutting down on low -profit portfolios, but our margin milestone has not been changed. It should have changed with the restructuring exercise. It could have been better than 16.5%. So, any reason for this?

I heard you. So, we seem to be in love with Mobility on some calls and we seem to be in love with SWC on some calls. We just don't like Sustainability, which is the highest profit margin in the Company, is it? So, let's go to this. So, all I can say at this stage is that we are looking at our portfolio very seriously. There are actions that we have taken. There are actions that we are taking. So, please allow us till April when we come back, when we provide you with that kind of clarity at this stage, please give us some more time in play right now. And on margins, I think Rajeev can please answer.

Sandeep, Rajeev here. I think on the second question that you have, that we should have seen probably an acceleration in terms of EBIT improvement. Rightly acknowledge, at this point, there is a little bit of prudence that is baked in. I probably will com e back in Q4 to clarify. Our intent is definitely to deliver earlier than what I am guiding for. But at this point, it is more prudence that I have maintained that time period.

Okay, fair enough. Thank you all the best.

Thank you. Our next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.

Hi, good evening. Wishing you a very Happy New Year. I just wanted some context around the margins. So, one, obviously, the support that we were giving for the customer has come off and we have also had some currency benefit as well. And looks like, well, we have cut down these businesses, the headcount is still pretty flattish. So, just wanted some context around how should we understand this? Is the margin benefit from the cut down of businesses likely to accrue more in the next quarter and beyond? Or that is largely already factored in, in the current quarter? So, yes, that was the first question. The second one was around when are we expecting to sort of give out salary increases? And finally, well, our deal wins have been consistently strong, I think, for the past couple of quarters. And I think if you look at it YoY, it is a very strong growth. When should we start expect that to really start showing up from an overall portfolio perspective in terms of higher growth?

So, Nitin, let me take the first couple of questions and then I will have Amit to respond to the deal wins part. So, first one on the margin trajectory, I think what you need to understand is that in the quarter, we have seen the margin improvement come t hrough from three areas. I called out during my commentary; it has indeed been on the improved quality of revenue and operational efficiencies. Of course, Sustainability has grown. We have also talked about some of the selective choice of port folio of revenues and geographies. That is one. The second is on discontinuation of the strategic support that we provided in the past few quarters and rupee depreciation. So, it is a mix across. But what I would like to leave you with is that look, going forward, the margin improvement will come from 3 to 4 areas. One is that we want to become more, I would say sharper in terms of capital allocation towards higher margin segments and technologies. Amit talked about EI, which is really the engineered intelligence. And you will see margins improving across Mobility, Sustainability and Tech. So, it is going to be a combination. I already talked about selective choice of portfolio and geography. Last but not the least is the operational efficiency. We have recently had Munjay, who has joined us as a Chief Operating Officer. He is championing the AI cause for the Company. And there is a lot of work at this point in time going around AI-led delivery. And we will call out more specifics as we come into Q4. But these are the areas that likely will continue to improve. And last is around the Intelliswift acquisition. Like I said earlier, we have got about 6 to 8 quarters of integration plan. And that business has continued to grow a nd improve in profitability. So, those are the 3 -4 areas that I will clarify in terms of the margin trajectory going forward.

Second question was about wages. We will provide wage hikes to all our employees worldwide in Q4. And we have baked that in into our estimates as we have provided you with our margin trajectory. So, that was your second question. Third was on deal wins. So, Nitin, we have had deal wins in Sustainability. So, I was very honest and open in sharing what did not ramp up. So, the Mobility win that we had in Q4 has not ramped up for us. And still going small as opposed to what we were expecting. The other wins that we have had in Sustainability and Plant subsegment as well as in Industrial Products have ramped up. And therefore, you can see that growth. Mobility, there were some smaller wins, sub $10 Mn wins that have helped us in terms of, you see, the biggest hit we take on the furlough quarter, which is October, November, December is in Mobility. And largely Mobility is US, in Europe where we take them, Mobility where we take the hit. So, in spite of that, Mobility sequentially grew for us. And we believe Mobility has bottomed out. You will see growth from here. And a little bit of ramp up, whatever we have won in Q3, that entire ramp up, that I am confirming to you has already taken place. In Tech, the deals that we had won, they did, like I mentioned to one of the earlier colleagues in the call, that when you look at Tech, if I keep the business that I walked away from, I would have actually shown you double digit growth as well as sequential growth in Tech as well. So, the deals are ramping up other than that one deal that I called out, the others have ramped up as we speak.

Perfect. That's helpful. Just one clarification. So, as we get into the next quarter with the wage increases in place, are there any, could you give us some sense in terms of puts and takes on how to think about margins there or should we expect margins t o be lower? We will not be able to offset the wage increase, I presume.

So, Nitin, let me take this question. So, you should see the wage increases in Q4 that Amit talked about could likely have an impact of about a percent. But we will continue to see improvement in margin because we factored this wage increase. Like you saw in Q3, we saw an improvement of 200 bps in gross margins and that also will somewhat pan out, not to that extent, but will pan out in Q4 between both gross margin or SG&A. So, about a percent of increment impact will get absorbed on account of all the aspects that I talked about on margin improvement.

Perfect. That's very helpful. Thank you so much and all the very best.

Thank you and congrats on the margin improvement. Just some clarity on the Tech vertical margins. Last year, Q3, I know that prior to the acquisition, but still, that's on an EBITDA basis, we are still a bit below that. So, to understand a bit with the restructuring, what would be a sort of sustainable EBITDA in Tech that we could see a year or so down the line?

Ravi, I will take that question. This is Rajeev here. So, a sustainable EBITDA in the Tech portfolio and you said, right, if you look at YoY, Q3 FY25 we had EBITDA of 11.5%. We have come in at 10.6% in Q3 FY26. What I will say that look, we would aspire for between 12% to 13% EBITDA range in Tech sector. Work left and I think we will continue to see this over a period. So, that's what you should factor in.

Right. Thanks so much. And this deal that you have won with this luxury OEM covering infotainment systems, is that purely, I can say, project -oriented work or is there a bit of IP also bundled as part of that?

There is a little bit of IP bundled in that, Ravi, and part of a little bit of that is renewal, being completely transparent, and there is a part of it that is new. So, we have won all that. In fact, I want to share that the IP that we have created, we have bundled that in, including our AI solution for improving productivity, etc., for the client. That's how we won this.

Right. Thanks so much. And another clarification on this deal, this Australian Enterprise, which segment would that fall under? The high-value engineering center that you are setting up.

Australia?

Yes.

That is LNG. LNGs will come in Plant Engineering. Most of the work will be offshore.

Thanks so much. And one last question on this on-site shift. I missed that part of the comment. I think, when do you expect this to move offshore? This is a strictly temporary issue.

So, Ravi, I will take this one. Rajeev here. I would say that this is more of, I think, kind of come back. See, we have hovered around offshore ratio between, say, 56% to 58%. Hence, I would not at this stage guide for where it stands to be in Q3. You will see a few quarters, and this will come back to that range.

All right. Thanks so much. Best of luck.

Thank you. Our next question is from the line of Sudheer Guntupalli from Kotak Mahindra Asset Management. Please go ahead.

Hi, Amit. Thanks for the opportunity and appreciate the color you have shared on restructuring of lower margin business and agree with you on all the logic that you spoke about. But my question is, when the SWC acquisition was announced roughly three years back, most of the analysts and investors have expressed the same concern at that point in time. So, three years out, what has changed for us to sort of claim that it's a great strategic trade to going to the level of saying that a lot of these businesses may become obsolete and that's why we are now restructuring it?

So, Sudhir, if I may help you here, the business that we have right now looked at that is not strategic for us for the future. So, if I step back and I talk about the whole portfolio, Sudhir, if I look at, so if I go back 15 years, we used to work on mech anical engineering in Auto with Tier 1s. Right? If I look at the last 5 years, 5 years ago we decided that we don't get into OEMs, we will be dead. And if we don't move to EV and Software, we will be gone. Today, if I look at our Mobility portfolio, you got 80% coming from OEMs and most of it in the non-mechanical area. So, things change, times change. 15 years ago, mechanical was core for the Company, they would give out embedded and software, car companies. Today, they don't care about mechanical, they are concerned about embedded and software because that is a differentiation. So, there is a part and relevance that core becomes contextual, contextual becomes core. This is reality in the business. Right? That's number one. Now, let me take the pointed question on SWC. I am again saying the part that we have rationalized, and we have taken out is stuff that's in Middle East/Europe part in Tech. There is a portion of US Tech, which is old technology that we were supporting and testing that we realized will actually become completely commoditized in the next 18 months. So, we actually shut that down and respectfully returned the equipment to the customer and that was all India billing that was happening. And third is there are parts of Indian customers where we did not accept new business that we could have otherwise accepted. So, those are the three elements there. Now, as far as Smart World specifically is concerned, there are parts of Smart World like I said, Cybersecurity and Telco Infra that have found their foothold in US and Europe. There's parts on data centers that have found their foothold in US and Middle East. But please give us some more time as we go through this process to come back to you as well. But we are fully aware of decisions made, decisions being made right now, and we are being strategic about it.

Sure, sir. I appreciate that context. So, I agree with you that over 10 -15 year time frame technology changes and a lot of things which were very relevant then might not be consequential anymore. But given that this is fairly recent, it's a three-year-old acquisition, and most of us have expressed this concern when you have actua lly refuted all these concerns and given a comfort that this is very strategic for you. So, in that backdrop comes my question of what is the incremental discovery here that led to this rationalization? That is part number one. And part number two, I am following up on this question because I think Vibhor and Sandeep asked the same question in a different form. And from your response to them, I was not very clear whether this entire restructuring is happening entirely out of SWC or there are other parts to it also. So, based on these two aspects , I am repeating this question. My apologies if there is a misunderstanding on my end.

No, Sudhir. So, let me again try to explain.So, number one, there are parts of Tech that we were servicing through Israel which we have shut down. Part two, there are parts of Tech where we were supporting them from India, getting the orders on INR billing which is what shows up as offshore for us in India revenue that we have shut down. There are parts, very small parts of old Mobility stack work in Europe that we have shut down. And fourth, there are Indian clients that take some of our offerings where we could have accepted the order at lower margins that we did not accept. We continue, in my commentary I told you FusionWorld.ai continues. There are parts of smart world that we are working on in cyber security that continue overseas. And the smart world delivery is continuing to ha ppen in India. So, I don't think the premise that you know the rationalization is all smart world is correct. But like I told you, you will allow us some more time and we will come back by within Q4 on what else steps we will make to take it forward. Look, our final business, the markets we operate are US, Europe, Japan, Middle East and parts of India that are profitable. If there are businesses in profit pools in India that are not profitable, I would not want to work on thos e businesses because that does not make sense for my investors.

Fair enough, sir. Thank you.

Thank you. Our next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.

Thanks for the opportunity. A couple of questions. First, about the $ 200 Mn deal intake, which we refer for five quarter on average basis, whether it is sufficient for us to meet our aspirational organic growth? Considering all the rationalization, what we are currently carrying out and optimal mix or let's say business mix chang e, which we envisage over the next couple of quarters? So, that is question one. Second question is about SWC and related to restructuring. First is whether you can q uantify impact of restructuring? Whatever we have carried out this quarter, you alluded 3-4 elements of restructuring. What would be the cumulative impact of that, if you can quantify? And last is about SWC business used to have a regular seasonality in Q4. Partly you indicated it is not only SWC, it is other part of business also where restructuring is heading out kind of thing. So, whether the usual seasonality, what we observe in the residual SWC, which we continue to execute, whether we will see in Q4. Thank you.

Thank you. So, number one, we aspire from this $ 200 Mn clip, we want to move to a $ 300 Mn clip. But I don't know when because it will take a little time. So, to answer your question, to accelerate growth, we should move from $ 200 Mn to $ 300 Mn clip. Absolutely, and then $ 400 Mn and then $ 500 Mn from there. That is broadly, of course, where we will look at as we move forward. So, that is A. B now, again, I am going to repeat myself here. But Smart World, the stuff that we have let go or we are letting go will have an impact. Let me answer it differently, had we not let it go, you would have had double digit growth. Now, because you let it go, you are going to have mid-single digit growth. So, you can do the calculation of what is the impact of that, that restructuring. Now, I have taken that into account and given that to you as a floor, assuming what we know in Q4 at this stage. If some deals, new deals come in, all of a sudden execution starts, Q4 picture could change. So, we will keep you updated as we move forward. I assure you, we will be as transparent as we can be with you. Whatever we know, you will know.

Let me ask it slightly different way. Considering whatever restructuring exercise, we are considering to make the organization future ready, do you think any impact on those extents on FY27 growth trajectory or we will end this exercise by year end?

We should end the exercise. Our current plan is that the exercise will end by March 31 st , 2026 and we will be able to go forward from there. That is the current plan.

Maybe I will add to that, Amit, just to clarify. See, maybe Amit talked about it earlier. Large part of this restructuring exercise has already been done in Q3. The impact that flows into Q4 you talked about which is baked into the mid-single digit growth. So, I would not want you to think that there is more coming in Q4. Whatever is done in Q3, that is already baked in the mid- single digit growth. That is one part. Second, to your point on the $ 200 Mn deal wins in a quarter, does that suffic e, to tell you that is not the only barometer for revenue growth. We operate through our order book, which gives us definite view in terms of revenue growth plus the large deal wins accelerate the revenue growth. So, I would not want you to think about large deal wins as the only way for driving revenue growth. So, those are the two points I will add to what Amit said.

I would like to confirm, the pipeline that you got is year on year has grown double digit as well. And we are confident there is some good significant deal in our pipeline. There are, I would like to say, multiple hundred million plus deals that we have g ot. There are some $ 50 Mn deals, $ 20 Mn, $ 10 Mn. Let us see how we can get to closure. The year is in play. The quarter is still in play.

No, fair point. I think we just try to understand because if I look at organic growth, Q4 would be double digit down. And that is why we try to understand how to do attain it. Thank you.

Thank you, sir.

Thank you. Our next question is a follow up from Vibhor Singhal from Nuvama Equities. Please go ahead.

Hi, sir. Thanks for giving me the opportunity again. Now, assuming all the questions on the restructuring part are done, I will just focus a couple of questions on the core business in which we are doing really well. So, on the Mobility side, you mentioned that you possibly see a turnaround. I remember a couple of quarters ago, we had discussed and you had mentioned that in the Mobility vertical, it's a very interesting situation that in the US, the Auto companies are kind of confused whether they should go towards EV or ICE vehicles. And the latest step by Ford is a testimony to that thing. And in Europe, they are facing a lot of competition from the Chinese competitors. So, what do you think has changed or could change in the coming quarter, which gives you the confidence that this Mobility vertical could be at the cusp of a turnaround? And secondly, on the Sustainability vertical, I think it's consistently done really well for us. Is the Plant Engineering sub segment of that really doing good for us? And do you think it will continue to do well going forward as well, given the backdrop of the uncertainty around the tariffs?

Got it. So, why don't I request Alind, why don't you take the Mobility question on US and Europe, and then I will take the Sustainability question.

So, Vibhor, hi. You know that the Mobility segment for us is basically three different verticals, Auto, Trucks & Off Highway and Aero & Rail. We do see the deliberateness coming in Auto, for sure. We do see the wins that we had done earlier ramping up now and leading to the growth that you are seeing or the growth that you are going to see going forward. Plus, the solutions that we had built out in SDV and we talked about the investment that we had done earlier, those are beginning to bear fruit. Now, your question about the electrification and the others, you have seen some write-offs happen by the large US automakers on the electrification si de. So, that's out in the open, but we see that the momentum on the SDV still remains and will continue to power the growth that we have. T&OH, as we talked about earlier, is a little bit soft for now, but Aero & Rail, which again has been a market for us and growing, especially on the engine manufacturer and certain rail companies, remain positive and we will see that trajectory grow as we think about it in the short term. A long time is not going to be played out, but we remain very positive about this sector as we see it.

So, if I may, so US bottomed out, we do expect growth from here on and we have seen the deals and they have started ramping back up organically and like Rajeev said, on the small one, less than $ 10 Mn number of deal wins, and on Europe, what is happening is that they are taking out higher cost suppliers and they are moving that work to India Inc. So, not just us, others should also gain from Europe as we go forward. Sustainability, the growth is coming from IP as well as PE, both of them. In fact, PE is getting a lot more work in industrial AI and digital and physical AI and plant is getting work because of build-out in LNG, build-out in Oil and Gas, build-out in CPG. So, both the areas are expanding for us and doing well.

Got it. CPG also? You are seeing good traction in CPG as well

So, right now, its between CPG and Oil & Gas, CPG some project got over, another one is going to start, but Oil and Gas is chugging along. In fact, we are diversifying into LNG and that we believe will be the next play in Middle East as well as Australia. So, this Australia win we have had in LNG is good for us to create the credentials in that area and US anyway, the work is going on and Europe in the digital part for Oil and Gas.

Got it. Thanks for taking my questions again and again, wish you all the best.

Absolutely. Thank you so much.

Thank you. Thank you all for joining us on the call today. We hope we were able to answer your queries. I know some of the questions will still be left. So, we look forward to interact with you through the quarter and answer those queries. Wish you all 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 all for joining us. You may now disconnect your lines.

This transcript has been lightly edited for clarity and accuracy.