- 17 Jan 2025
- ICICI Securities
LTIM'S Q3FY25 RESULTS : MIXED BAG QUARTER
News: LTIM reported revenue of US$ 1,138.7 mn, up 1.1% QoQ/ 5.5% YoY (up 1.8% QoQ/ 5.6% YoY in CC terms). Segment wise Manufacturing (19.3% of the mix) and BFSI (35.6% of mix) reported growth of 7.8% and 3.3% QoQ while Hitech (23.7% of the mix), Health (6.3% of the mix) and Retail (14.3% of the mix) reported a de-growth of 5.7%, 0.5% and 0.3%, respectively. Geography wise on a QoQ basis in US$ terms ROW (11.5% of mix), North America (74.7% of mix) expanded by 9.7 and 0.7% while Europe (13.8% of mix) de-grew by 3.1%. EBIT margin of the company decreased by ~170 bps QoQ to 13.8%, primarily due to a wage hike impact of ~200 bps which was partially offset by cost optimisation benefits of ~50 bps. The company's PAT was down 13.2% QoQ at ₹ 1,087 crore. The company during the quarter won its highest ever quarterly TCV of US$ 1.7 bn, up 29% QoQ and 12% YoY. The company’s net employees during the quarter increased by 2,362 (of which 1,400+ are freshers) to 86,800 while attrition was down ~20 bps QoQ at 14.3%.
Views: LTIM reported in line with expectations revenue growth during Q3, while margins disappointed due to a wage hike impact (expected) this quarter. Segment wise, BFSI continued to show growth momentum (discretionary spend uptick in small pockets albeit not in a secular way) along with strong growth in the Manufacturing (owing to limited exposure to auto). The Hi-tech vertical was impacted due to a productivity benefit pass through (albeit margin neutral) for a large client which shall be a headwind in Q4 too as mentioned by the management. Whir growth momentum will sustain, there will be a continued pressure on margins in Q4 given full quarter impact of the pass through to top Hitech client, furlough spillover and higher amortisation. Overall, the company is structurally well placed for growth aided by the robust TCV expansion (highest ever quarterly in Q3), deal ramp ups along with discretionary led pickup.
Impact: Neutral