LTIMindtree Won’t Be As Profitable As Expected In Fiscal 2024, CEO Says
LTIMindtree had aimed to deliver an operational profitability of 17-18% in FY24. That’s not happening now due to higher-than-expected furloughs and sluggish conversion of deals into revenue.
LTIMindtree Ltd. won’t be as profitable as promised in the ongoing fiscal as furloughs ate into margins and deal conversion remained sluggish, according to chief executive officer Debashis Chatterjee.
“We’ve clearly called out that in FY24, the 17–18% margin range doesn’t hold good,” Chatterjee told NDTV Profit during a post-earnings interaction on Thursday. “The margin expansion programme, however, remains intact. It’s only been deferred for a few quarters (to propel growth).”
Furloughs—which were higher-than-anticipated and across verticals—ate into LTIMindtree’s profitability in the quarter ended Dec. 31. Delayed decision-making—despite the highest ever order inflows of $1.5 billion—weighed on revenue growth.
“We haven’t seen this kind of caution among clients in the past four-to-five quarters,” said Chaterjee. “The profile of our revenues is heavily dependent on discretionary spending by clients, and that’s largely been absent. Additionally, cost takeout and efficiency deals take longer to convert, but that too is elongated due to delayed decision-making.”
The CEO’s commentary comes a day after the company delivered lacklustre numbers.
Revenue of the Bengaluru-based IT services firm rose 1.2% over the previous three months to Rs 9,016.6 crore in the quarter ended Dec. 31, 2023, according to an exchange filing on Wednesday. That compares with the Rs 9,076.7 crore consensus estimate of analysts tracked by Bloomberg.
LTIMindtree Q3 Results: Key Highlights (Consolidated, QoQ)
Revenue up 1.2% at Rs 9,016.6 crore (Bloomberg estimate: Rs 9,076.7 crore)
EBIT down 2.62% at Rs 1,385.9 crore (Bloomberg estimate: Rs 1,458.1 crore)
EBIT margin down 61 bps at 15.37% (Bloomberg estimate: 15.9%)
Net profit up 0.6% at Rs 1,169.3 crore (Bloomberg estimate: Rs 1,191.3 crore)
In dollar terms, revenue rose 0.8% sequentially to $1,075.5 million in October-December.
To be sure, LTIMindtree’s long-term target to become a $10-billion revenue enterprise—with an operational profitability of 19-20%—remains intact.
“We are in a position to capitalise as and when the market opens up,” Chatterjee told NDTV Profit. “These short-term hiccups do not change our long-term plans. The capabilities we have is what clients are looking for.”
