A few clients are deferring discretionary spends, as they wait for supply chain issues and market sentiment to improve, chief executive Debashis Chatterjee told ET in an interview.
“The way we look at the macro environment is by talking to the clients in our portfolio… and, speaking to them, I still feel the overall sentiment is quite bullish,” Chatterjee said, adding that clients have not halted discretionary spends.
On Wednesday, the company reported a 37.3% jump in net profit and 36.2% increase in revenue for the first quarter ended June 30, in line with analyst estimates.
On operating margins (19.2%) and deal wins ($570 million), the company surpassed estimates.
Chatterjee said the company expects to maintain margins at 20% through the ongoing fiscal year.
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“Some individual specific clients got impacted because of their market impact in Ukraine and Russia and because of the supply chain issues as China again went into a lockdown. In a couple of client scenarios, we had some programmes which got deferred but none of them were really cancelled. They are not stopping their discretionary spending completely,” Chatterjee said.
The tapered spending in a few retail and CPG (Consumer Packaged Goods) client segments along with the ramp down of a client sequentially dragged down the segment revenue by 8.7%.
Continental Europe and the UK fell sequentially in terms of revenue – down 9.2% and 18.7%, respectively.
Merger synergies
This is the first quarterly results following the amalgamation announcement of Larsen & Toubro group entities Mindtree and L&T Infotech in May.
The companies won a large deal together during the June quarter.
Chatterjee said capturing market opportunities has been the priority, while cost synergies may also emerge.
“There is a steering committee, which is working on the integration plan. The specific quantifications of the merger are being worked on. So, at an appropriate time, we will share that, but it will take some more time. Cost synergies will also emerge, but the primary driver is the revenue synergies,” he said.
The L&T group firm also ruled out participating in the private 5G network spectrum auctions but said it would support clients in terms of technology deployment.
“We will be definitely interested in deploying solutions, but we are not into something which is not aligned to our overall strategy. We will still be supporting our clients in terms of the specific service lines and in areas of application support, redefining the customer experience,” Chatterjee said.
