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- 18 Oct 2024
- ICICI Securities
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LTIM: DECENT PERFORMANCE WITH BROAD BASED GROWTH ACROSS GEOGRAPHIES AND VERTICALS; MARGINS IN H2 LIKELY TO BE WEAK
News: LTIM reported revenue of US$ 1,126.6 mn, up 2.8% QoQ/ 4.8% YoY (up 2.3% QoQ/ 4.4% YoY in CC terms). All the segments reported growth on a QoQ basis with Health (6.4% of the mix), BFSI (35.6% of mix), Retail (14.5% of the mix), Hitech (25.4% of the mix) & Manufacturing (18.1% of the mix) reported a growth of 6.1%, 4%, 2.8%, 2% and 0.6% respectively. Geography wise on a QoQ basis in US$ terms ROW (10.6% of mix) North America (75% of mix) & Europe (14.4% of mix) expanded by 3.8%, 2.6% & 2.8% respectively. EBIT margin of the company increased by ~50 bps QoQ to 15.5%, given the absence of visa cost and currency tailwinds. The company's PAT was up 10.2% QoQ at ₹ 1252 crore. The company during the quarter won TCV of US$ 1.3 bn, down 7.1% QoQ and flat YoY. The company’s net employees during the quarter increased by 2,504 of which 1,100 plus are freshers to 84,438 while attrition was up by ~10 bps QoQ at 14.5%. The company declared a dividend of ₹20 per share.
Views: LTIM reported decent revenue growth during Q2. On the positive side, there was increased traction in the BFSI vertical and the company won a US$200 mn+ deal in the Manufacturing vertical which is expected to sustain growth in the vertical in the coming quarters. The company m, however, indicated that not much discretionary spend has come back and focus of clients still remains on cost takeout and efficiency-oriented deals. Some moderation is expected in the growth momentum in H2. The margins would also see pressure in H2 due to seasonal tailwinds on account of furloughs, fewer billing days as well as wage hikes (~200 bps impact in Q3). Overall, the results highlight steady operational performance, though deal momentum will need to pick up to support sustained revenue growth going forward. Achieving stronger double digit revenue acceleration will also be critical for meeting the company’s medium-term margin targets of 17-18%, which has been pushed back now
Impact: Neutral