X

LTIMindtree Ltd Q3 FY24 Earnings Conference Call Insights

Key highlights from LTIMindtree Ltd (LTIM) Q3 FY24 Earnings Concall

  • Financial Performance
    • Delivered resilient Q3 performance despite higher than expected furloughs and unchanged macro environment.
    • Q3 revenues at $1.08 billion, up 3.5% YoY in USD terms and 3.1% in constant currency.
    • Sequential revenue growth 0.8% in USD and 0.7% in constant currency reflecting broad furlough impact.
    • EBIT margin at 15.4% and net profit margin at 13%.
    • Strong order inflow of $1.5 billion, up 21% YoY despite unchanged cautionary environment.
    • 9-month FY24 order inflow at $4.2 billion, up 19% YoY reflecting strength of H2 experience capabilities.
  • Industry Vertical Performance
    • BFSI vertical declined 1.4% YoY due to higher furloughs and cautionary approach to new spend.
    • High tech, media and entertainment grew 0.3% YoY despite higher than expected furloughs.
    • Manufacturing and resources strong growth of 20.1% YoY due to seasonal higher pass-through.
    • Secured significant transformation and supply consolidation deal in energy and utilities vertical.
    • Retail, CPG, travel, transportation and hospitality grew 0.6% YoY.
  • Outlook
    • Expect Q4 performance to remain similar to Q3.
    • Strong order inflow and pipeline set stage for medium term growth.
    • Margin optimization continues but 17-18% exit margin pushed out.
    • Some furloughs will return but not all furloughs will come back in Q4.
    • Environment remains cautious, delays in client decision making to persist.
    • Growth recovery when it comes expected to be broad-based across industries, geos.
  • Sales Activity & Pipeline
    • $4.6 billion overall sales pipeline, up 30% versus last year.
    • Participating in 30+ advised deals, seen as alternative to larger players.
    • Seeing strong growth in ERP service line with demand for core modernization.
  • Margin and Growth Outlook
    • Overall margin program and approach not changing but modifying targets.
    • Targets being deferred by a few quarters to continue investing back in business.
    • Utilization already high, don’t want to increase further in unhealthy way.
    • Will get back to 17-18% exit margin target over longer term after some quarters.
    • Uncertain about growth outlook and lower H2 guidance.
    • Need sufficient bench to ramp up deals being closed. Utilization higher than comfort zone, want to bring it down.
  • Leverage for Margin Improvement
    • Gross margin improvement in low margin accounts.
    • Pyramid rationalization by adding freshers.
    • Reducing average cost of resources.
    • Multi-year deals allow better cost management.
  • Cash Allocation Policy
    • Priority is sustaining momentum and building cash balance.
    • Evaluating candidates for M&A at the right time and opportunity.
    • Payout policy based on profitability, not just cash balance.
    • Aim is to generate higher cash flow returns for better payout.
Related Post