LTIMindtree on October 18 reported a 2.25 percent year-on-year (YoY) decline in net profit at Rs 1,162 crore for the September quarter of the current financial year amid demand uncertainty, muted revenue growth and wage hikes.
Sequentially, the IT services company’s net profit plunged by 0.87 percent, faring better than Moneycontrol’s estimates of a 10 percent decline.
Consolidated revenue came in at Rs 9048.6, growing 7.86 percent YoY and 2.43 percent quarter on quarter (QoQ).
In dollar terms, revenue came in at $1.08 billion growing by 1.6 percent QoQ, slightly missing analyst estimates of 1.7 percent growth QoQ.
The EBIT margin or operating margin plunged to 16 percent from 16.7 percent last quarter, but remained above Moneycontrol’s estimates of 15 percent. EBIT is short for earnings before interest and taxes. Debashis Chatterjee, Chief Executive Officer and Managing Director, LTIMindtree, continues to maintain the 17-18 percent operating margin guidance for Q4FY24.
The drop in EBIT margin in the current quarter was mainly due to absorbing wake hike cycle, which was effective from July 1, Chatterjee said.
“Our results in the second quarter were highlighted by strong revenue growth of 5.2 percent YoY, in USD terms, along with a healthy operating margin of 16 percent despite wage hikes across the organisation. This all-round performance, in a challenging business environment, demonstrates the strength of our capabilities and disciplined execution," he said.
He added, "Our robust order inflow at $1.3 billion, representing a 20 percent increase YoY, and growth across our client bands speaks to the strength of our client relationships, robust delivery and our ability to address the priorities of our clients across their efficiency and transformation mandates."
LTIMindtree reported $1.3 billion worth of deal wins, as compared to $1.41 billion reported in Q1FY24.
“Although we anticipate above average furloughs in Q3, we are confident that our robust order inflow and healthy pipeline will help us deliver stronger H2 of FY24, setting a promising stage for FY25. Our integration activity milestone in our ongoing path to success…with the completion of this activity, we are now strategically placed to take advantage of the market recovery,” Chatterjee said while addressing the media.
The management also added that deal cycles continue to remain elongated, taking longer to close deal negotiations.
Chatterjee highlighted customer interest in generative AI, said the company currently engaged in over 100 project conversations around Gen AI. The company already has 20 billable active projects utilising its generative AI capabilities. As reported by Moneycontrol, the second quarter has continued to be tough for IT companies, including LTIMindtree, which rolled out hikes of 0-2 percent. Sources have said employees were spending longer durations on bench as project pipeline slowed.
The company announced an interim dividend of Rs 20 per equity share.
Shares of LTIMindtree on October 18 closed 1.05 percent lower from the previous day, at Rs 5,160 apiece on BSE.
Hiring and attrition
Total headcount in Q2 for LTIMindtree stood at 83,532, with a net addition of 794 employees. The company also added 1,400 freshers to its workforce this quarter.
Trailing 12-month attrition rate dropped to 15.2 percent, down from 17.8 percent sequentially.
LTIMindtree is now beefing up its generative AI workforce, plans to complete training of 10,000 employees in generative AI capabilities by Q3.
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