LTIMindtree on Monday reported a sharp 31% sequential decline in its net profit for the October-December quarter, as a one-time charge linked to the implementation of new labour codes weighed on earnings.
The country’s sixth-largest IT services company posted a net profit of Rs 971 crore for the quarter, compared with Rs 1,401 crore in the September quarter.
The profit number came in well below Bloomberg’s consensus estimate of Rs 1,413 crore. The company said the decline was largely on account of a Rs 590 crore charge related to the new labour codes. Excluding this impact, net profit would have stood at Rs 1,401 crore, broadly in line with street expectations.
Revenue for latest quarter
Revenue for the quarter rose 3.7% sequentially to Rs 10,781 crore from Rs 10,394 crore in the previous quarter. This was largely in line with Bloomberg’s estimate of Rs 10,726 crore, indicating steady demand despite a mixed macro environment for global IT services.
Operating performance showed some improvement on a sequential basis. Earnings before interest and tax rose to Rs 1,737 crore from Rs 1,648 crore in the September quarter. Ebit margin expanded by 20 basis points quarter-on-quarter to 16.1%, aided by operational efficiencies and a better project mix, even as the one-time labour-related cost impacted the bottom line.
Post-earnings commentary
In its post-earnings commentary, the company said demand momentum remained intact, supported by deal wins in areas such as artificial intelligence and digital transformation. Management indicated that growth visibility for the remainder of the year remained stable, with deal traction continuing across key verticals.
Segment-wise, the banking, financial services and insurance (BFSI) vertical saw a marginal sequential decline of 0.5% in revenue during the quarter. In contrast, the healthcare segment recorded a strong 9.9% sequential growth, reflecting improving client spends in that segment.
“Our strong Q3 performance reflects the impact of our strategic AI pivot, continued success in large deals, and operational excellence, supported by our proactive efforts to build a more resilient and balanced portfolio,” CEO and MD Venu Lambu said. He added that this marked the third consecutive quarter of over 2% sequential growth and that the company remained focused on driving profitable growth.
Employee headcount stood at 87,958 at the end of December, with a net addition of 1,511 employees during the quarter. Trailing 12-month attrition was 13.8%, compared with 14.2% in the previous quarter. The company on-boarded 1,036 freshers during the period.
LTIMindtree also said it would begin rolling out wage hikes from the fourth quarter, with the process spread across two consecutive quarters. The first phase of the hikes is expected to be completed in the March quarter.