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Informist, Wednesday, Jul 17, 2024

 

--LTIMindtree: Geopolitical environment continues to be uncertain 
--LTIMindtree: Looking at wage hikes in second half of the year 
--LTIMindtree: See wage hikes in Oct-Dec 
--LTIMindtree: Confident momentum in BFSI segment to continue Jul-Sep
--LTIMindtree:BFSI clients starting to scale up high-priority programs
--LTIMindtree: Comfortable with order intake right now 
--LTIMindtree: Hiring momentum to continue Jul-Sep to meet demand 
--LTIMindtree: Deals closed in Jan-Mar fully ramped up, aiding sales 
--LTIMindtree: See significant increase in lateral hiring in Jul-Sep 

 

By Anjana Therese Antony

 

MUMBAI – LTIMindtree Ltd is confident that the growth momentum in its core banking, financial services, and insurance segment will continue in the September quarter, the company said in a post-earnings virtual call today. In the June quarter, the vertical saw sequential growth of nearly 3% in dollar terms, compared to a 2.8% sequential decline in the previous quarter.

 

The growth follows two unexpected client cancellations in the March quarter, which had hit the company's financial performance then. The company also said banking, financial services, and insurance clients had started to scale up high-priority programmes, which were paused last year, with momentum seen across sub-segments. 

 

The company said the June quarter marked a positive start to the current financial year, and it sees early signs of a recovery in demand. However, the broader macroeconomic environment remained the same and "businesses continue to adopt agile strategies to cope with the economic conditions", the company said. IT companies have seen weak financial performance for at least a year due to weak demand trends and discretionary spending, which made some major players in the sector cut their revenue guidance in the previous quarter.

 

After posting disappointing earnings for the March quarter, the Mumbai-based company reported improvement across key earnings metrics in Apr-Jun. While it reported 3.1% on-quarter growth in its consolidated net profit at 11.34 bln rupees in Apr-Jun, it failed to meet the Street's estimate of 12.07 bln rupees.

 

Its consolidated revenue rose nearly 3% sequentially to 91.43 bln rupees, higher than analysts' estimate of 90.83 bln rupees. The Larsen & Toubro subsidiary said deals closed in Jan-Mar were now fully ramped up, which also helped in aiding sales. Revenue growth for LTIMindtree was better than that of some of its bigger peers that have announced their earnings so far. While the consolidated revenue of Tata Consultancy Services Ltd rose 2.3% sequentially, that of HCL Technologies Ltd fell 1.6%.

 

Compared to the year-ago period, the net profit was down 1.5% and revenue was up 5.1%. 

 

MARGINS

In terms of operating profit, the company reported a near 5% sequential rise at 13.71 bln rupees. The earnings before interest and tax margin expanded 30 basis points sequentially to 15%.

 

Higher furloughs and weak discretionary spending had hit the company's margin in the March quarter, which also weighed on its aspiration to meet the target of 17-18% operating margin by 2023-24 (Apr-Mar). The company also said that while it continues to aspire to meet the goal, this target "may be getting deferred by a few quarters". 

 

HIRING, HEADCOUNT

In order to meet demand, the company said its hiring momentum would continue in Jul-Sep, along with a significant increase in lateral hirings. "We had a significant intake of freshers in this quarter ... Though we don't want to call out a number, we will continue to take freshers as per the plan that we have laid out," the management said. Asked about wage hikes, it said it was looking at a wage hike cycle in the December quarter. The company had earlier said it plans to hire over 500 freshers every quarter. 

 

LTImindtree's headcount increased to 81,934 as of Jun 30 from 81,650 a quarter ago. The number of active clients was 748 as of Jun 30. The utilisation rate of employees, excluding trainees, was at an all-time high and stood at 88.3%, against 86.90% a quarter ago.

 

On Tuesday, shares of LTIMindtree ended 1.5% higher at 5,562.35 rupees on the National Stock Exchange. Today, the equity market was shut on account of Muharram.  End

 

US$1 = 83.58 rupees

 

Edited by Avishek Dutta

 

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