Larsen & Toubro Infotech Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Larsen & Toubro Infotech Limited (LTI) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:22:04] Ashwin Mehta from Ambit Capital enquired why the company’s cash generation is so weak and its outlook. Anil Rander CFO answered that last quarter LTI did have an incentive payment on which there was a TDS liability, which was paid in the current quarter. Also quantum of advance PAT is higher vs. last quarter. However, LTI is confident of pulling it back in 3Q23.

• [00:24:18] Ashwin Mehta of Ambit Capital also asked about the kind of capacity increase in Mahape. Nachiket Deshpande COO replied that it’s about 8,000 seats.

• [00:25:00] Mohit Jain with AnandRathi asked about lower margins and its outlook in 2H23. Sudhir Chaturvedi President Sales said that LTI is sticking to its usual margin band of 14-15%. LTI added that margins over a period of time will improve as it scales up and is working on to maintain the growth momentum.

• [00:32:55] Vibhor Singhal from PhillipCapital asked that given the wage hikes are behind, if 2H23 EBIT margins are expected to be better than 1H23 EBIT margin. Nachiket Deshpande COO replied that LTI don’t guide for EBIT, but guide for only PAT which is in the 14-15% range, and is maintaining that guidance.

• [00:38:36] Sandeep Shah of Equirus Securities asked that after winning the large deal if there is any change in pattern in ramp up due to challenging macro. Sudhir Chaturvedi President Sales replied that there is no change in ramp up. The deal cycles are consistent with what it has been.

• [00:42:44] Sandeep Shah of Equirus Securities asked that from a growth demand perspective anything materially changed vs. Europe vs. US for LTI or MINDTREE. Sudhir Chaturvedi President Sales said that LTI knows how to chase the right dollar and as the market changes, the company will make sure it’s in the right conversations for that.

• [00:43:58] Sandeep Shah with Equirus Securities asked that on the depreciation side, if there was an acceleration in 2Q23 and if it will go back to normalized level in 3Q23. Anil Rander CFO answered that it will go back to the normal level. And Mahape is likely to come only in 4Q23 or next 1Q24.

• [00:49:49] Manik Taneja from JM Financial enquired how many fresher were added in 2Q23 and 1H23 and if the plan to hire 6,500 freshers for FY23 stays. Nachiket Deshpande COO answered that the company is on track with the guidance of 6,500. In 2Q23, LTI onboarded about 1,600 freshers vs. 1,000 in 1Q23.

• [00:51:05] Rahul Jain of Dolat Capital asked about any changes as part of MINDTREE merger from external point of view or internally. Sudhir Chaturvedi President Sales answered that from a client perspective there is excitement. And on process, regulatory approval is in the last leg and since both are independently operating, there is no change. The plan is not to lose growth momentum.