Mindtree Limited Q4 FY22 Earnings Conference Call Summary

Key highlights from Mindtree Limited (MINDTREE) Q4 FY22 Earnings Concall

Management Update:

• During the year, MINDTREE said it added 33 new logos, and grew the revenue share of its focus 100 accounts to nearly 90%. The number of $20 million accounts doubled from 7 to 14.

• MINDTREE reported that it is increasing investments in Metaverse Solutions and capabilities to extend its technology and design thinking leadership into an integrated consulting led Metaverse offering.

• MINDTREE’s net headcount addition in FY22 was over 11,200, more than six times the headcount addition in FY21. Through FY23, MINDTREE expects its hiring of fresh graduates to increase significantly.

Q&A Highlights:

• Sandip Agarwal of Edelweiss asked about how difficult is the manpower situation compared to what’s seen in 3Q22. Debashis Chatterjee, CEO said that MINDTREE have been trying to control attrition. Though LTM attrition is still on the rise, but MINDTREE expects it will stabilize and gradually come down over a period of time.

• Vibhor Singhal from PhillipCapital asked about salary hikes for FY23 and the quantum of it. Vinit Teredesai, CFO replied that on the salary hike, both offshore on-site and timing, MINDTREE’s endeavor is to stick to the salary cycle in 2Q23. Salary hikes are expected to be in line with the industry requirements.

• Vibhor Singhal from PhillipCapital also asked that on the on-site level, if there is any incremental pressure that MINDTREE is facing because of higher global inflation that might require the company to give higher salary hikes than before.  Vinit Teredesai, CFO answered that there is nothing that the company is seeing differently at this point of time.

• Vimal Gohil with Union Mutual Fund asked if receivables should normalize going forward during the year. Debashis Chatterjee, CEO answered that 60 to 65 days is MINDTREE’s sweet spot. And that’s what the company intends to look at, and will try to maintain the DSO within that range.

• Vikas Ahuja of Antique Stockbroking asked if growth could be materially different from what was achieved in FY22 due to inflation in the U.S. or maybe slowdown in Europe. Venu Lambu, ED said that as of today the company has a robust pipeline, which MINDTREE is confident that it will continue to strengthen and grow in the near-term.

• Vikas Ahuja of Antique Stockbroking asked that excluding the pent-up part in FY22, if MINDTREE can replicate what it achieved in FY22, in FY23. Venu Lambu, ED replied that the company’s endeavor is to deliver industry-leading growth in FY23. That’s the aspiration and goal MINDTREE will work towards.

• Rishi Jhunjhunwala from IIFL asked about hiring, the significant delta between headcount growth of 47% vs. revenue growth of more like at 31%. Debashis Chatterjee, CEO said that as MINDTREE controls the attrition the difference should be reducing.

• Sidharth Vohra asked about the number of lateral hires versus fresher additions. Debashis Chatterjee, CEO replied that when the company does hiring, it’s a combination of hiring. In the last two to three quarters, MINDTREE’s hiring on the freshers is roughly in the range of 1,500 plus per quarter.

• Sidharth Vohra also asked about the company’s utilization level of 83% for last 4-6 quarters and if it will be same or lower going forward. Debashis Chatterjee, CEO answered that ideally, the company’s comfort level of utilization will be in the 80-82% range. And at some point of time, that normalization will also happen.