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Dolat Capital Report
LTIMindtree Ltd. reported revenue growth of 1.9% QoQ in constant currency terms (our estimate: 3%), impacted due to higher furloughs and fewer working days. Key verticals (QoQ): banking, financial services and insurance (up 5.7%), hitech, media and entertainment (down 4.7%) and manufacturing and resources (up 10.5%).
Operating profit margin contracted by 360 basis points QoQ to 13.9% (our estimate: 14.5%), due to furloughs and fewer working days (130 bps), one-off integration costs (100 bps) and higher employee costs (130 bps). Expect steady reversal of these impact by FY24E.
Management highlighted clients deferred some projects and slowed decision making, however no project cancellations was witnessed.
LTIM's aspiration of $1 billion from revenue synergies and 200 bps margin improvement is expected to be achieved over next four-five years.
While LTIM is confident on benefitting from integration synergies, we believe that transition period to profit synergies will take much longer to play out, especially in light of worsening global macros.
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