Revenue grew 30.6% to Rs 4,522.8. crore in-line with analyst estimates. On a sequential basis net income dipped by 0.5% and revenue grew 5%. Attrition was marginally down at 23.8% compared to 24% last quarter.
Operating margin was down 40 basis points to 16% over 16.4% last year and 130 bps over last quarter dragged by wage hikes rolled out during the April-June quarter. LTI added four Global Fortune 500 logos in Q1 and four large deal wins during the quarter with net new total contract value of $79 million ($80 million in Q4 FY22).
“We are pleased to report 26.6% YoY revenue growth in constant currency. We are not seeing any cancellation or deferment of projects for the calendar year because our clients are in a secular spend cycle,” said Sudhir Chaturvedi, president sales and executive board member.
The management added that client discussions show a relook at budgets in 2023 and that 70% of its revenue remains unaffected by the macro environment.
“In fact, some clients are asking us to advance executions of projects as they have the budget to do so in the calendar year 2022,” he added.
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Year on year segmental growth was led by banking and financial services at 35.9% followed by energy and utilities at 21.7%. On a sequential basis, manufacturing was down 11.5%. From a service offering perspective, the largest business line of ADM and testing grew 28.1% over the year. Enterprise solutions and cloud infrastructure and security offerings were both down around 4% sequentially. The management stated that the sequential dip was from a pass through benefit seen in Q4 FY22.
“Our healthy pipeline will ensure that we maintain our large deal momentum. Our sustained net headcount addition reflects our confidence and continued focus to deliver strong growth in FY23,” said Nachiket Deshpande, chief operating officer & executive board member.
Among geographies, North America grew 25.5% over the year while Europe grew 31.2% and India (which comprises less than 10% revenue) grew 56%. On a sequential constant currency basis the rest of the world and India were down due to cross currency headwinds and license revenue impact. He added that one of the large deals signed during the quarter came from Europe and expects more deals from Europe in Q2.
“LTI reported strong performance beating our estimates in most parameters. We are positive on medium term revenue growth resilience but expect accelerated pressure on near term EBIT margin due to supply side concerns and higher costs,” said Mitul Shah, Head of Research at
Securities in a note.
It must be noted that this is the first quarterly results after mid-tier IT firms Mindtree and LTI approved amalgamation of both the independently listed firms in May.
“ We have reached out to all of our key stakeholders, post the merger announcement and the overall feedback has been positive. Our employees are also excited about the next stage of growth,” added Deshpande. The company has scheduled a shareholder and creditor meeting on August 10.
The firms will be housed under the Larsen & Toubro Group with a combined market cap of over $3.5 billion. This will be the biggest merger in the Indian IT sector since the $2.7 billion Satyam-
merger in 2013. The merger is expected to be completed by December.
The company added a net 2,118 people quarter on quarter to reach a total base of 48,766 employees. This compares to an average of 2,600 employee additions over the past four quarters.
“We are seeing attrition stabilising over the last two quarter. It is still only two quarters for us to be confident about the trend but we expect it to stabilize over the next two quarters,” added Deshpande.
He added that the company is on track to hire 6,500 freshers during the fiscal year.
