Analyst Concall
Clients likely to be cautious on big decisions - LTIMindtree
This story was originally published at 21:06 IST on 23 April 2025
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--LTIMindtree: Macro uncertainties slowed earnings growth momentum Oct-Mar
--CONTEXT: Comments of LTIMindtree mgmt in post-earnings call with analysts
--LTIMindtree: Deal pipeline robust as of end of FY25
--LTIMindtree: Operational efficiencies helped maintain EBIT margin Jan-Mar
--LTIMindtree: Productivity passback to top client concluded in Jan-Mar
--LTIMindtree: Clients delayed deal ramp-ups Jan-Mar, hitting sales growth
--LTIMindtree: Some deals expected to close in Jan-Mar have been delayed
--LTIMindtree: See growth in manufacturing vertical steady in short term
--LTIMindtree: Clients adopting wait-and-watch mode on US tariffs
--LTIMindtree: Wage hike impact continued in Jan-Mar, hit margins
--LTIMindtree: See FY26 order book bigger than FY25
--LTIMindtree: Clients likely to be cautious in taking big decisions
By Rajesh Gajra
NEW DELHI – The management of LTIMindtree Ltd. said Wednesday that clients are adopting a wait-and-watch approach due to US tariffs and will likely be cautious in taking big decisions going forward. But despite these headwinds, it expects the company's growth momentum to continue, the management said in a post-earnings conference call with analysts and investors.
The management sees growth in the manufacturing vertical to be steady in the short term, and pointed to prospects being good for the retail vertical due to "exciting conversations" going on currently with clients on potential deals. The deal pipeline continued to be robust at the end of March, the management said. It expects the order book in 2025-26 (Apr-Mar) to be higher than that in FY25.
The management said the company was favourably positioned in terms of a couple of large deals which the company will announce in due course. These likely large deals, along with the current deal pipeline, are the reasons the company was confident of revenue and margin growth coming back in the June quarter.
The company's management refused to give any revenue or margin guidance for the full year FY26. LTIMindtree typically does not give guidance numbers. The management said it can't even give a subjective commentary on outlook for the full year, and that in the current situation, the company "would take it one or two quarters at a time."
In FY25, according to the management, despite robust revenue growth in the first half, momentum slowed in the second half due to macro uncertainties. In the March quarter, things got worse as deals that the company "should have closed in Q4 (Jan-Mar), they are also kind of getting shifted to the Q1 (Apr-Jun)," the management said.
Clients delayed ramping up deals in the March quarter, and "the volumes did not come the way we had expected," the management told analysts and investors. LTIMindtree's revenue in dollar terms declined 0.7% on quarter to $1.13 billion in the March quarter and the earnings before interest margin stayed unchanged at 13.8%. The management said the company was able to maintain margins due to improved operational efficiency.
There was an adverse effect, however, on the margin in the March quarter due to the continuing impact of wage hikes implemented in October. In rupee terms, LTIMindtree's consolidated revenue from operations increased 1.2% sequentially to INR 97.72 billion, but missed the analysts' estimate of INR 98.49 billion. The company's consolidated net profit of INR 11.29 billion was also below the Street view of INR 11.55 billion, and grew 4% on quarter.
The March quarter revenue of the company also bore the brunt of passback of productivity gains from artificial intelligence efficiencies to a large client from the hi-tech vertical that started around November. "We have kind of completed that exercise in Q4 (Jan-Mar), so there is no overhang of that into the next quarter (Apr-Jun)," the management said.
On Wednesday, shares of LTIMindtree ended 5% higher at INR 4,536.70 on the National Stock Exchange of India. End
US$1 = INR 85.42
Edited by Tanima Banerjee
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