LTIMindtree Reports Dip in Profit Margins Amid Rising Costs and Market Challenges

IT services company LTIMindtree on Wednesday reported a 1.5% decline in net profit to Rs 1,135 crore for the June quarter, primarily due to lower profit margins.

Revenues grew 5.1% year-on-year to Rs 9,142.6 crore, although the operating profit margin narrowed to 15% from 16.7% in the previous year.

The company aims to achieve an operating profit margin of 17-18%, as shared at the time of the amalgamation, according to MD and CEO Debashis Chatterjee, who noted it would take longer to reach this goal.

Chatterjee highlighted a 0.30% sequential increase in the margin, expressing optimism that it would continue to rise throughout the year but did not specify a timeline.

A senior official cited higher visa and travel costs as factors behind the margin decline, adding that operational efficiencies would be leveraged to improve the numbers.

LTIMindtree signed new business deals worth USD 1.4 billion during the quarter, with a sequential revenue growth of 2.8%.

Despite an unchanging macro environment, Chatterjee expressed hope for sustained momentum, pointing to early market recovery signs and clients initiating high-priority projects using savings from past deals.

The banking, financial services, and insurance vertical saw a year-on-year revenue dip but showed sequential improvement.

The company plans to establish a subsidiary in Brazil to serve the Latam market, with its joint venture with oil giant Aramco now operational.

Approximately 85 of its top 100 clients are engaged in AI or generative AI deals with the company, spanning 150 projects.

The total employee count declined to 81,934 from 82,738 a year ago but saw an increase from 81,650 in the preceding quarter.

Chatterjee stated that 1,400 freshers were added during the quarter, emphasizing commitments to fresher additions. Wage hikes are expected to take effect from the third quarter onwards.

He declined to comment on a new Karnataka law requiring local employment.

(With inputs from agencies.)