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Bengaluru: India’s sixth largest IT services company, LTIMindtree Ltd, saw its operating margin drop further below its full-year guidance of 17-18% as higher than expected furloughs and less working days in the December quarter dented its profitability.
In its December quarter earnings filed after market hours on Wednesday, LTIMindtree reported operating margin of 15.4%, down 60 basis points from September quarter. In a post-earnings call, CEO and MD, Debashis Chatterjee, said the drop was due to more holidays and less working days, as well as unfavourable, and cautious macro conditions.
Yet, the company did not revise its margin guidance for FY24, and also reported record quarterly order booking of $1.5 billion—up 21% YoY.
The Mumbai-based IT company posted a 0.8% sequential growth in operating revenue to $1.08 billion for the December quarter, and net profit grew by a slim 10 basis points to $140.5 million. Both revenue and profit missed Street expectations—Bloomberg estimates based on analyst polls expected $1.09 billion in revenue, and $143.8 million net profit.
Revenue from its biggest revenue-generating vertical—banking, financial services, and insurance (BFSI), as well as hi-tech, media and entertainment—dropped 1.6% and 3.1% sequentially, due to spending pressure for clients.
While the company did not report positive revenue growth from North America and Europe sequentially, its rest of the world region grew 14.6% sequentially, which Chatterjee said was due to business in the Middle East.
“LTIMindtree’s performance was below expectations because I expected higher gro-wth. It was a very flattish growth in dollar terms. Despite easing supply side const-raints post covid and a fall in headcount this quarter, I was expecting expansion of operating margins but here it has declined. Even the rise in net income is because of higher other income,” said Omkar Tanksale, equity research analyst at Axis Securities.
Net headcount in the December quarter was down by 1,061 compared with three months ago as the company marked a year of its formation. LT Infotech and Mindtree started worked as one company, LTI Mindtree from November 2022, more than three years after parent Larsen and Toubro bought Mindtree in 2019.
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Published: 17 Jan 2024, 10:14 PM IST
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