19-Oct-2023
2 mins read
In its Q2 financial results, LTI Mindtree experienced a 2.25% YoY decline in net profit, amounting to Rs 1,162 crore, attributed to demand uncertainty, muted revenue growth, and wage hikes. However, the company reported a 7.8% YoY growth in revenue, reaching Rs 9,048.6 crore, with a 2.43% increase quarter on quarter (QoQ).
Performance in Dollar Terms
While the consolidated revenue in dollar terms reached $1.08 billion, growing 1.6% QoQ, it slightly missed analyst estimates of 1.7% QoQ growth. The EBIT margin, or operating margin, decreased to 16% from 16.7% in the previous quarter due to absorbing the effects of wage hikes effective from July 1.
CEO’s Confidence in the Future
CEO Debashis Chatterjee expressed confidence in the company’s future, citing robust order inflow that positions them for a promising H2 of FY24 and a solid start for FY25. Despite the challenging business environment, the company achieved a healthy operating margin of 16% and reported a robust 5.2% YoY revenue growth in USD.
Order Inflow and Deal Wins
LTI Mindtree reported order inflow worth $1.3 billion, representing a 20% increase YoY. Although Q2 deal wins were slightly lower than Q1FY24, Chatterjee emphasized the company’s ability to address client priorities and undergo transformations efficiently.
Challenges in Deal Cycles
The company noted that deal cycles have been elongated, taking more time to close negotiations, reflecting the current challenges in the IT sector.
Focus on Generative AI
Chatterjee highlighted customer interest in generative AI, with over 100 project conversations around Gen AI. The company is actively involved in 20 billable projects utilizing its Generative AI capabilities.
Hiring and Attrition
LTI Mindtree maintained a total headcount of 83,532 employees, with a net addition of 794 in Q2. It also added 1,400 freshers to its workforce. The trailing 12-month attrition rate decreased to 15.2% from 17.8% sequentially.
Investment in Generative AI Workforce
The company has plans to train 10,000 employees in generative AI capabilities by Q3, indicating a strategic focus on emerging technologies.
Interim Dividend Announcement
In addition to the financial results, LTI Mindtree declared an interim dividend of Rs 20 per equity share.
Stock Performance
The company’s stock closed 1.05% lower at Rs 5,160 on the BSE on October 18, reflecting market dynamics and investor sentiment.
In conclusion, LTI Mindtree’s Q2 results, while showing a decline in net profit, also demonstrate resilience and adaptability in a challenging business environment, focusing on emerging technologies like generative AI and a positive outlook for future growth.