- 25 Apr 2024
- ICICI Securities
LTIMindtree: Project cancellations impact quarters performance
LTIM - 4652 Change: -40.75 (-0.87 %)News: LTIMindtree reported overall weak result in Q4FY24 with revenue & margins impacted by cancellation of 2 projects. The company reported revenue of US$ 1,069.4 mn, down 1.3% QoQ both in dollar & CC terms while in rupee terms the revenue came at INR 8,892.9 crore, down 1.4% QoQ. The revenue decline was mainly due to cancellation of 2 projects which had an impact of 80 bps. Segment wise BFSI (35.1% of mix) & Manufacturing (18.6% of mix) declined by 2.7% & 9.6% QoQ while Hitech, Retail & Health grew by 4.7%, 1.2% & 4.8% respectively. Geography wise RoW & Europe declined by 10.6% & 0.6% while North America (73.8% of mix) was flat sequentially. The company’s top 5 clients revenue grew by 1.6% QoQ while the top 10/20/40 client’s revenue declined by 0.8%/1.3% & 2.2% respectively. EBIT margin of the company declined by 70 bps QoQ due to the headwinds of -80 bps impact of cancellation of 2 projects & -60 bps impact of higher depreciation mitigated by the tailwinds of +70 bps of reversal of furloughs & lower pass-through income. The company during the quarter won TCV of US$ 1.4 bn, down 6.7% QoQ. The company’s net employees during the quarter declined by 821 to 81.6k while attrition grew by 20bps QoQ to 14.4%. The company declared final dividend of INR 45 per share. For FY24 the company revenue grew by 4.2% in CC terms while in dollar & rupee terms it grew by 4.4% & 7%. The company reported an EBIT margin of 15.7%, down 50 bps while PAT margin came at 12.9%, down 40 bps. The company in FY24 won TCV of US$ 5.6 bn, up 15.7%.
Views: LTIMindtree results in Q4 was impacted by cancellations of 2 projects in BFSI segments indicating that weak discretionary spending environment continues among its clients. The company indicated that it expects growth to pick up in next quarter as the large deal ramps up but haven’t indicated any quantum of growth for FY25 as it expects discretionary spending demand to remain weak. The company’s deal wins remain steady across FY24 and it also mentioned that 80% of the pipeline now consists of cost take out deals but key will be revenue conversion & ramp up of those deals. The company’s reiterated that medium term aspiration of margin expansion to 17-18% is pushed forward as revenue growth is key factor to achieve the same.
Impact: Negative