LTIMindtree Q1 Profit Dips 1.5% on Margin Pressure

Mumbai, Jul 17 (PTI) IT services company LTIMindtree on Wednesday reported a 1.5 per cent decline in net profit to Rs 1,135 crore for the June quarter, mainly on lower profit margins.

Its revenues grew 5.1 per cent year-on-year to Rs 9,142.6 crore, but the operating profit margin narrowed to 15 per cent from 16.7 per cent in the year-ago period.

The company continues to aspire to get the operating profit margin into the 17-18 per cent target which was shared at the time of the amalgamation, its MD and chief executive Debashis Chatterjee said, adding that it will take longer to reach the number.

Pointing to the 0.30 per cent sequential widening in the number, Chatterjee said the operating profit margin will keep inching up as the year progresses but declined to specify a time line by when the company will reach its aspirational goal.

A senior official explained that in the reporting quarter, higher visa and travel costs were among the factors which pulled down the margins and added that it will continue to depend on operational efficiencies to increase the number.

The company signed new business deals of USD 1.4 billion during the quarter, while the sequential revenue growth came at 2.8 per cent.

Chatterjee said that it is hopeful of the same momentum continuing, even though the macro environment remains broadly unchanged.

There are early signs of recovery in the market with some greenshoots emerging, he said, adding that clients are using the savings through efficiencies from past deals to start high-priority engagements now.

Among the industry verticals, the largest one of banking, financial services and insurance showed a dip in revenues when compared to last year, and the CEO pointed to a sequential improvement and hoped that the momentum will continue even beyond the second quarter.

The company is planning to set up a subsidiary in Brazil to cater to the Latam market and also other global customers, he said, adding that its joint venture with oil major Aramco has become operational now.

Around 85 of its top-100 clients are doing artificial intelligence or generative AI deals with the company, Chatterjee said that the number of projects stands at 150.

He, however, declined to specify the exact contribution to revenues on the AI front and added that in the near future, AI will become so pervasive that all the deals will have a component of it.

The total number of employees declined to 81,934 from 82,738 a year ago, but were higher than 81,650 in the preceding quarter.

Chatterjee said the firm added 1,400 freshers during the quarter, and will honour all its commitments on the fresher addition front, while a senior official explained that adding more freshers will also help on the margin front.

He also said the wage hikes will become effective from the third quarter onwards.

The CEO declined comment on a contentious Bill passed by Karnataka mandating employment for locals.