IT giant LTIMindtree reported a 3.2% sequential growth in revenue to ₹9,432 crore in the second quarter of FY25. Debashis Chatterjee, company CEO and MD, expresses optimism about the momentum continuing into Q3. Strong deal wins and sustained deal traction in key verticals, along with hiring in Q2 positions the company well, he said.

The company saw a 5.9 per cent year-on-year growth from Q2FY24’s ₹8,905 crore. Profit after tax (PAT) stood at ₹1,251 crore, with a 10.3 per cent sequential growth from Q1’s ₹1,135 crore and a 7.7 per cent y-o-y increase from Q2FY24’s ₹1,162 crore.

“The sequential growth in Q2 was broad-based, across all the verticals and geographies we operate in,” the CEO said, adding that the company added 22 clients in the quarter, with 742 active clients. However, in Q1FY25, the company had 748 clients.

“This quarter, our top 20 clients have grown well on a y-o-y basis, above the company average. This gives me a good feeling that the account mining is working. From a pipeline standpoint, the order book was $1.3 billion, similar to the same quarter last year. The pipeline is robust; we have several deals nearing final decisions,” he said.

In the quarter ended September, LTIMindtree announced a $200 million deal with a US-based global manufacturing leader. Sector-wise, BFSI remains the largest, followed by technology, media & communications, and manufacturing. While BFSI showed a 2.3 per cent y-o-y growth, the media sector grew 12 per cent y-o-y, and manufacturing at 5.8 per cent.

“As far as BFSI is concerned, the growth we saw in Q2 was broad-based, across all the clients in the sector. We had a few new wins. Though they are mostly efficiency and cost takeout, some wins are due to vendor consolidation. There is not much change in terms of discretionary spending. Clients are very cautious given this is an election year for them,” said Chatterjee.

Furloughs in quarters 3 & 4

He added the momentum in BFSI will continue into Q3 and Q4 with one caveat – Q3 has certain seasonalities and furloughs, with fewer working days.

Discretionary is coming back slowly, with further improvement in AI and GenAI, he noted. Clients have been working on POCs, with some getting into production.

The company will offer wage hikes because of which there will be around 200 basis points of impact on Q3 margin. Operating margins stood at 15.5 per cent, up from Q1’s 15 per cent and down from 16 per cent in the corresponding quarter of the last fiscal.

“Some of that impact can be recovered through the operational efficiency we will gain. Overall, we follow a process – we control the margin and always try it slightly up. And as the business comes, we need to hire,” he explained. In Q2, the headcount stood at 84,438 professionals, an increase of 2,504 from Q1. Trailing 12 months attrition was 14.5%.

In terms of geographies, North America contributed 75 per cent of the company’s revenue in Q2, followed by Europe at 14.4 per cent. 10.6 per cent came from the rest of the world.

North America dependency

“Nearshoring has always been there. We have a setup in Poland and Calgary which have wrapped up well. We are in the process of setting up an office in Latin America as well. But from a market standpoint, we continue to be heavily dependent on North America and I don’t think that will change soon. But we want growth to come broad-based from the various geographies as well. From a market standpoint, we will continue to focus on the geographies we are operating in right now.”

He added that in Saudi Arabia, LTIMindtree signed an agreement with Global Digital, a wholly-owned subsidiary of Saudi Aramco to set up a joint venture with an initial investment of $12.3 million for providing IT services in the Middle-East and Northern Africa (MENA) region. “Once the JV kicks, in, there will be a lot of opportunities in the Middle East.”

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