LTIMindtree Q1 net profit up 4.1%; co flags delayed decision-making, macro uncertainty
LTIMindtree Q1 results: IT services company LTIMindtree on Monday posted a lower-than-expected 4.1 per cent year-on-year rise in its consolidated net profit to Rs 1,152.3 crore for the June quarter, as it flagged delayed decision-making by clients in the current macro environment.
LTIMindtree Q1 results: IT services company LTIMindtree on Monday posted a lower-than-expected 4.1 per cent year-on-year rise in its consolidated net profit to Rs 1,152.3 crore for the June quarter, as it flagged delayed decision-making by clients in the current macro environment. The company indicated that the previously-aimed double-digit growth for FY24 looks "challenging" although it still remains an aspiration.
"...I think the double-digit growth was for the full year...So, if you've heard our commentary, it's very clear that the couple of expectations we had, in terms of the market, given that it's going to be really challenging...We still have an aspiration, but it looks challenging as far as the full year is concerned," LTIMindtree CEO Debashis Chatterjee said during a briefing. The company intends to continue on its journey of profitable growth and would definitely like to be in the leaders' quadrant so far as growth is concerned, he emphasised.
The company clocked a 4.1 per cent year-on-year rise in its consolidated net profit to Rs 1,152.3 crore in the quarter ended June 30, although the numbers were a tad below market expectations. Born out of the merger of L&T Group companies LTI (Larsen and Toubro Infotech) and Mindtree, the sixth-largest IT services firm also registered a 13.8 per cent rise in revenue from operations at Rs 8,702.1 crore during the just concluded quarter.
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The company had 723 active clients as of June 30, 2023. During the quarter, its USD 50 million-plus clients increased by 3 to 13. On a sequential basis, its topline remained almost flat compared to the March quarter, while the net profit rose 3.4 per cent quarter-on-quarter."The assumptions that we had made right at the beginning of the year, some of them have gone wrong," Chatterjee conceded.
Describing the current times as "paradoxical", he said that they have a strong deal pipeline and good order inflow but there are delays after closing deals. "The way the market is behaving right now, it's very difficult to understand. I call it paradoxical times - on one hand, we have a very strong pipeline of deals and good order inflow. On the other hand, we are seeing delays. Even after closing the deal, we feel that the deals are not wrapping up the way we want it," he said. The company had been hoping that the delayed decision-making would subside by the first quarter and things would return to normalcy by the subsequent quarter, but that has not happened.
"The first assumption was that we saw the delays, we were hoping that all these delays will be over by Q1 and Q2 onwards it should be normal business, which obviously did not happen. These delays are broad-based and across industries, not one specific industry or specific geography," he added. The company's headcount fell by 1,292 to 82,738 in the just-ended quarter. Chatterjee said that the attrition may continue to show a downward trend. "LTM attrition was 17.8 per cent, down from 20.2 per cent recorded last quarter. In the quarter, attrition was at a similar level to that in the last quarter. And hence, we believe our attrition may continue to show a downward trend," he said.
On deal pipeline across geographies, he noted that in dollar terms North America registered year-on-year growth of 8.2 per cent, while Europe grew by 7.3 per cent. "In Europe, our customers are carefully assessing their business needs and making strategic decisions about projects, budgets and IT spent. However, there is still strong demand for application management and SAP rollout," he pointed out. Chatterjee said the expectations in terms of the market are going to be difficult to call out given the current macro environment.
Last week, market rivals TCS, HCL Tech and Wipro announced their first-quarter results. Wipro on Thursday posted a 12 per cent year-on-year rise in consolidated net profit at Rs 2,870 crore for the June quarter but missed analysts' estimates as reduced discretionary spending by clients impacted its financial performance. HCL Technologies reported a 7.6 per cent year-on-year rise in its June quarter net profit on the back of new order wins. TCS has registered a 16.83 per cent increase in its June quarter net profit to Rs 11,074 crore but sounded circumspect about growth prospects for the fiscal due to market uncertainties.