Larsen & Toubro Infotech Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from Larsen & Toubro Infotech Limited (LTI) Q1 FY23 Earnings Concall

Management Update:

• LTI said it remains on track with its fresher hiring plan to hire at least 6,500 freshers in FY23. In 1Q23 attrition stood at 23.8% vs. 24% in 4Q22 on an LTM basis. LTI also expects attrition to continue for few quarters before it comes down materially.

Q&A Highlights:

• Sudheer Guntupalli from Kotak Mahindra asked about employee morale within the company and incentive schemes. Sudhir Chaturvedi Director replied that the company is not seeing any anxiety with the employees but are seeing excitement. On incentives, LTI will continue with the same multi-year ESOP plans for future as well.

• Vikas Ahuja from Antique Stock enquired if LTI is seeing any change in client decision making pattern due to recession. Sudhir Chaturvedi Director said LTI is not seeing cancellations or deferments from the client side. LTI is also not seeing any conversations on pricing and cuts.

• Nitin Padmanabhan of Investec asked about the slight level of caution with clients. Sudhir Chaturvedi Director said that 47% of LTI business is BFSI and they are in a secular technology modernization cycle. LTI added that it’s well poised if clients invest in growth stack or efficiency stack.

• Nitin Padmanabhan of Investec enquired about attrition  at the senior level. Sudhir Chaturvedi Director replied that there is no increase in attrition at the senior level at LTI.

• Sandeep Shah with Equirus Securities asked if the margins at EBIT level will have an upward bias from 2Q to 4Q. Nachiket Deshpande COO said that on margins QonQ, as the year progresses, LTI will definitely recover some bit of its wage hikes related costs. Therefore, with the growth momentum LTI is confident to stay in its PAT guidance of 14-15%.

• Sandeep Shah with Equirus Securities enquired if there is any change in LTI’s forex hedge policy. Anil Rander CFO answered that there is no change in the policy. LTI has been consistent in terms of reporting and in terms of the policy for what LTI has for the purpose of forex.

• Mohit Jain from Anand Rathi asked about deal pipeline and the deals won during 1Q23. Sudhir Chaturvedi Whole-Time Director said the deals came across verticals. And for regions, there are 2 from the US, 1 from Europe, and 1 from the emerging markets regions. Deal pipeline is looking good and will announce some in due course.