IT services firm LTIMindtree on Friday posted its first earnings as a combined listed entity post-merger of L&T Infotech (LTI) and Mindtree. LTIMindtree’s Q3 net profit was up 4.7% year-on-year to Rs 1,000.7 crore, beating consensus Bloomberg estimates of Rs 930.10 crore. However, the net profit declined 15.8% sequentially due to one-time costs related to integration of the two companies, the management said during the earnings call.

The company’s revenues for the December quarter rose 4.8% sequentially to Rs 8,620 crore, making it India’s sixth-largest IT services company by revenue. Revenues were also higher than the consensus Bloomberg estimates of Rs 5,058.30 crore.

The dollar revenue grew 14% annually and 2.4% sequentially in constant currency to $1.04 billion on the back of broad-based growth.

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“The combined entity has started out with a $1 billion quarterly revenue run rate, a top-quartile constant currency year-over-year revenue growth of 16.3%, and a robust order inflow of $1.25 billion…Clients are cautious in finalizing their technology budgets but the long-term investments continue,” said Debashis Chatterjee, chief executive officer and managing director of LTIMindtree.

Going forward in FY24, LTIMindtree expects to see more of the “cost take out deals” that focus on creating efficiencies, Chatterjee said. Operating margins for the December quarter narrowed to 13.9% from 17.5% in the preceding three months.

Analysts at Motial Oswal Financial Services see the complementary vertical presence at LTI and Mindtree as one of the key long-term benefits for the combined entity. Banking, financial services & insurance (BFSI) contributed 47% to LTI’s revenue and about 18% to Mindtree’s revenue while Technology (including Communications and Media) contributed about 43% to Mindtree’s revenue and 12% to LTI’s topline. Post-merger, BFSI grew 22% year-on-year and contributed 35% to LTIMindtree’s topline while Hi-Tech, Media and Entertainment grew 9% year-on-year and contributed 24.7% to the topline for the third quarter.

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The company’s board has recommended an interim dividend of Rs 20 per equity share. The record date has been fixed as January 31,2023.

The attrition rate moderated to 22.3% from 24.1% in the preceding three months indicating supply-side pressures are gradually coming down. The management expects attrition to come down further in the near future. LTIMindtree’s total headcount as of the December quarter stood at 86,462 employees. Chatterjee said the hiring momentum is expected to increase.

LTIMindtree declared its results on Friday after markets hours. Ahead of the results, shares of LTIMindtree closed up 0.6% at Rs 4,269.85 on the BSE.