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Informist, Thursday, Jan. 16, 2025

 

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--LTIMindtree: Wage hike impacted Oct-Dec EBIT margin by 160 bps 
--CONTEXT: Comments of LTIMindtree mgmt in post-earnings analyst call 
--LTIMindtree: Committed to drive artificial intelligence for customers 
--LTIMindtree: Remain committed to drive artificial intelligence for own use 
--LTIMindtree: Onboarded 1,400 freshers in Oct-Dec 
--LTIMindtree: Deal pipeline was strong in Oct-Dec 
--LTIMindtree: See Jan-Mar margins improving but wage hike impact to continue 
--LTIMindtree: Deal wins, furloughs reversal to help Jan-Mar revenue growth 
--LTIMindtree: Utilisation could inch up a little further in Jan-Mar 
--LTIMindtree: Deal growth momentum will continue in Jan-Mar 
--LTIMindtree: Hope to grab more mkt share by using AI in all solutions 
--LTIMindtree: Expect growth momentum to continue in Jan-Mar

 

By Arya S. Biju and Avishek Rakshit

 

MUMBAI/KOLKATA – Information Technology company LTIMindtree Ltd. expects the revenue growth momentum which it has been witnessing since the beginning of the current financial year to continue in Jan-Mar as well, Chief Executive Officer and Managing Director Debashis Chatterjee said Thursday. The growth will be driven by a ramp-up in deals, reversal of most of the furloughs, and continued revenue inflow from the banking, financial services, and insurance vertical, he said.

 

However, short-term headwinds on account of artificial intelligence-driven productivity, could impact growth momentum, Chatterjee cautioned.

 

The fifth-largest IT company in the country based on market capitalisation expects its margin to improve in Jan-Mar. However, the impact of wage hikes will continue to impact margins, company officials said. Absorbing the impact of wage hikes may take more time in the current growth environment. "...Probably we will be able to take the margin up if we do see a double-digit growth coming back in FY26," Chatterjee told sector analysts in a conference call after declaring its results for Oct-Dec. In the December quarter, wage hikes impacted the operating margin of the company by 160 basis points.

 

In the December quarter, the technology company had reported a record order inflow with a total contract value of $1.68 billion, up 29% on the quarter led by renewals, new deal wins, and deals related to vendor consolidation. The orders included a new deal worth over $50 million in the manufacturing vertical and two large deals in the banking vertical, the company said. The company also has a good large deal pipeline with deals in the final stages, which is supported by continuing client focus on cost reduction and vendor consolidation, LTIMindtree said.

 

"...we are going to aggressively push AI (artificial intelligence) in everything, which we hope that eventually will benefit...us because we'll be winning more market share in the process," the management said. The company has been focusing on artificial intelligence for the last six months, and could infuse it to deliver higher levels of productivity than in the past. This has also helped the technology company to win some of the vendor consolidation and cost-take-out deals, the company's management said. The company said it will continue to drive AI innovation for its customers and for its own use. 

 

With the growth in deal wins, LTIMindtree expects employee utilisation to inch up a little further in Jan-Mar. However, in the December quarter, the company's utilisation level dropped to 85.4% from 87.7% in Jul-Sept, aligning with its focus on strengthening the bench capacity. The company said it will continue to onboard freshers in line with its strategy to broaden the pyramid. It had on-boarded 1,400 freshers in Oct-Dec. 

 

LTIMindtree announced its earnings for the December quarter, post-market hours, Thursday. The company reported a lower-than-expected consolidated net profit of INR 10.85 billion for the latest quarter, down 13.24% on quarter. Its consolidated revenue rose 2.42% sequentially to INR 96.61 billion. Thursday, shares of LTIMindtree ended at INR 5,978.80 on the National Stock Exchange, up 2.4%.  End

 

US$1 = INR 86.55

 

Edited by Akul Nishant Akhoury

 

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