LTIMindtree Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from LTIMindtree Ltd (LTIM) Q3 FY23 Earnings Concall

Management Update:

• [00:03:18] LTIM expects its sequential growth momentum to accelerate in 4Q as the impact of furloughs eases.

• [00:13:25] LTIM said its quarterly annualized attrition declined by more than 6% to around 18% and expects attrition to trend down further.

Q&A Highlights:

• [00:20:29] Sudheer Guntupalli from Kotak asked about the drivers of weakness in revenue and margin. Debashis Chatterjee CEO said that the 100 bp impact was due to the one-time integration cost. Also, there was some impact due to less working days, furloughs and 3Q being seasonally weak.

• [00:26:19] Vibhor Singhal with Nuvama asked about client overlaps in retail or travel or high-tech and how equipped is the sales force for that. Debashis Chatterjee CEO said the client overlap across the erstwhile entities is very minimal. The objective of the integration was to ensure that the same leadership and client behavior remains.

• [00:31:40] Vibhor Singhal with Nuvama enquired if the company is going to follow the 3Q increment cycle for freshers going forward. Vinit Teredesai CFO clarified that it’s not a 3Q cycle. It depends on when the freshers joint the company. So the impact is scattered over a period of the year.

• [00:35:42] Sulabh Govila at Morgan Stanley asked about the profitability levels now and going forward as a combined entity. Vinit Teredesai CFO said that LTIM is not giving any guidance but is confident of returning back to the industry leading profitable growth.

• [00:39:19] Sulabh Govila at Morgan Stanley enquired about the tax rate going forward. Vinit Teredesai CFO answered that 4Q23, LTIM should be in the current range of 23.6-24%. From FY24, it’s expected to be in the range of 25-25.5%, subject to changes in budget.

• [00:43:34] Ruchi Burde Mukhija from Elara asked if LTIM is seeing competition changing in the context of large deals. Debashis Chatterjee CEO clarified that post-merger, there is no change in terms of the competitive landscape.

• [00:45:06] Ravi Menon at Macquarie asked if the company is going after larger deals as big as $500 million post-merger. Debashis Chatterjee CEO answered that LTIM already has a large deals teams and it will got through bigger deals. Also, LTIM added that one of the rationale of the merger was to pursue larger deals.

• [00:49:04] Sandeep Shah with Equirus asked if the 3Q total order intake metric can be expected every quarter. Debashis Chatterjee CEO said that’s the intent. And over a period of 4-5 years, LTIM wants to create a synergy revenue of about $1 billion and a synergy of about 200 bp in terms of margins.

• [00:49:48] Sandeep Shah with Equirus also asked if there is any client specific issue due to macro issues in top 10, 20 accounts.  Debashis Chatterjee CEO answered that there is no pressure, but there are some isolated cases of deferring start of some programs. However, LTIM feels it’s temporary in nature.

• [00:56:35] Dipesh Mehta from Emkay Global asked about the growth trajectory in high-tech, media and entertainment, considering the macro situation. Sudhir Chaturvedi President said that there is work to be done but there is decrease in spending due to boardroom caution. However, LTIMindtree is focusing on the right verticals for growth, and should see a return to growth in Q4.