LTIMindtree Q3 results: Net profit rises 17% to Rs 1,169 cr, revenue up 5%

LTIMindtree posted a net profit of Rs 1,169 crore for the third quarter ended December, up 16.8 per cent year-on-year and 0.6 per cent sequentially, below the consensus Bloomberg estimates of Rs 1,230 crore.

The Bengaluru-based IT services company’s revenue for the third quarter stood at Rs 9,017 crore, up 4.6 per cent year-on-year, driven by broad-based growth, but below the consensus Bloomberg estimates of Rs 9,140 crore. On a sequential basis, revenues grew only 1.2 per cent due to higher-than-expected furloughs across all verticals. The third quarter is a seasonally weak quarter for IT companies due to higher furloughs resulting in lower billable hours.

The dollar revenue stood at $1.08 billion, up 3.5 per cent year-on-year on the back of deals worth a total contract value of $1.5 billion during the quarter, its highest ever.

“We have booked our highest-ever order inflow at $1.5 billion, representing a 21 per cent increase year-on-year, and our strong cash flow metrics helped us cross Rs 10,000 crore in cash and investment balance. These strong indicators make us confident to deliver on our path to success as we enter the new year,” said Debashis Chatterjee, chief executive officer and managing director, LTIMindtree.

Chatterjee said in a post-earnings media call that the demand environment continues to be “cautionary” and client spends are now more focused on return on investment. “The deals we are seeing are related to cost take-out and efficiency,” he added.

LTIMindtree’s earnings before interest and taxes margin contracted to 15.4 per cent from 16 per cent in the preceding quarter due to the impact of furloughs and a lower number of working days.

In terms of verticals, banking, financial services and insurance, the largest vertical that contributed 35.6 per cent to LTIMindtree’s top line during the third quarter, declined 1.4 per cent quarter-on-quarter in dollar terms while hi-tech, media, and entertainment, which contributed 22.9 per cent to the revenue, grew 0.3 per cent. Manufacturing and Resources grew the highest at 20.1 per cent year-on-year in dollar terms due to seasonal strength.

The attrition rate for the December quarter moderated to 14.2 per cent from 15.2 per cent in the preceding quarter, indicating it is gradually coming down. LTIMindtree added 500 freshers in the December quarter and “we plan to hire on a relatively real-time basis,” Chatterjee said. The company had a total of 82,471 employees as of 31 December.

LTIMindtree declared its earnings after market hours on Wednesday. Ahead of its earnings, the company’s shares closed up 0.64 per cent at Rs 6,274.45 on the Bombay Stock Exchange.