LTIMindtree Eyes Healthier Start To FY25 After Q4 Results Disappoint
LTIMindtree's Q4 profit fell 5.86% to Rs 1,100 crore on the back of revenue that declined 1.37% to Rs 8,893 crore.
Growth at LTIMindree Ltd. faltered and operational profitability dwindled in the fourth quarter of fiscal 2024 as slowdown woes persisted in India's $250-billion IT services industry.
Revenue of the L&T Group firm fell 1.37% over the previous three months to Rs 8,893 crore in the quarter-ended March 31, 2024, according to an exchange filing on Wednesday. That compares with the Rs 8,975-crore consensus estimate of analysts tracked by Bloomberg.
LTIMindtree Q4 Results Highlights (Consolidated, QoQ)
Revenue down 1.37% at Rs 8,893 crore (Estimate: Rs 8,975 crore).
EBIT declines 5.57% to Rs 1,308.7 crore (Estimate: Rs 1,383 crore).
Margin down 66 basis points to 14.71% (Estimate: 15.4%).
Net profit down 5.86% at Rs 1,100 crore (Estimate: Rs 1,154 crore).
Note: One basis point is one-hundredth of a percentage point.
In dollar terms, revenue fell 1.3% quarter-on-quarter to $1.069 million in the January-March quarter. In constant currency terms, it was down 1.3% sequentially.
Business Performance
The sequential decline in revenue was a one-off; LTIMindtree will be back to growth in the first quarter of the new fiscal, the management said in a post-earnings media call.
“The macro is playing out very heavily as far as deciding on a timeline for recovery is concerned,” Debashis Chatterjee, chief executive officer at LTIMindtree, said in a post-earnings media call. "The focus this financial year is on execution.”
The revenue dip sequentially was mainly due to the delay in ramp-ups and furloughs spilling over from the December quarter. A margin recovery to 17-18% is also a few quarters away.
"The margin dip is due to revenue not scaling as anticipated. That’s due to lack of operational efficiency," Vipul Chandra, new chief financial officer at LTIMindtree, said during the media call.
For LTIMindtree, the banking, financial services and insurance business—which accounts for more than a third of the IT industry revenue—declined 2.8% sequentially in dollar terms. The dip in the BFSI revenue was due to cancellation of two deals in the space, the management said, as the vertical draws a lot of discretionary deals.
The manufacturing and resources vertical also shrunk 9.6%. Gains were seen in the technology, media and communications business as well as healthcare and life sciences.
Geographically, the North American business grew by 0.1% sequentially, even as Europe (down 0.2%) and Rest of the World (down 10.8%) declined. Still, the US business accounted for nearly 72% of the top line.
Dealmaking
"Our order inflow for the full year was at $5.6 billion, registering a 15.7% growth over FY23," Chatterjee said in the earnings statement.
While the deal pipeline remains strong, deal wins are still largely cost takeout. Discretionary deals are still largely absent—client conversations indicate that the green shoots are still some time away.
The IT services firm added net 30 clients in the January-March quarter as against 23 in the previous three months on a trailing 12-month basis. The number of active clients dipped to 738 from 739 a quarter ago.
Of these, just two were in the $100 million-plus bracket, while there were $394 million deals, according to an earnings presentation. The Top 5 clients brought in nearly a third of the revenue, but the next 15 still didn't bring half of the top line.
People Power
As on March 31, 2024, LTIMindtree had 81,650 employees—down 821 from the previous quarter. The company enjoyed an attrition rate of 14.4% on a trailing 12-month basis, as against 14.2% in October-December 2023.
The utilisation levels dipped 50 basis points sequentially to 86.9%. Women made up a third of the workforce.
LTIMindtree FY24 Results: Key Highlights (YoY)
Revenue up 7.03% at Rs 35,717 crore.
EBIT up 3.41% at Rs 5,569 crore.
EBIT margin down 55 bps at 15.67%.
Net profit up 3.95% at Rs 4,586 crore.
In dollar terms, revenue rose 4.4% year-on-year to $4,287.3 million in the fiscal ended March 31, 2024.
"We closed FY24 amid tough macro environment and delivered a resilient performance, with full-year revenue growth of 4.4% in dollar terms and an EBIT margin of 15.7%," Chatterjee said in a statement.
"As the market dynamics evolve, we are excited to be part of innovations, partnerships, and initiatives that our clients will embark on in FY25."
On Wednesday, LTIMindtree shares rose 0.23% to Rs 4,732.55 apiece on the BSE, even as the benchmark Sensex ended the day 0.16% higher at 73,852.94 points. The quarterly results were declared after market hours.