LTIMindtree unlikely to post double-digit revenue growth in FY24

Bengaluru, 19 July Mid-tier IT services firm LTIMindtree is unlikely to clock double-digit revenue growth in the current financial year owing to weak first quarter performance.

“Against the backdrop of weaker-than-expected Q1 earnings, along with muted demand commentary for Q2, particularly for its largest vertical-BFSI, which continues to face delay in decision making- , double-digits growth in FY24 appears unlikely,” ICICI Securities wrote in a note.

BFSI contributed around 38 per cent of revenue to LTIMindtree’s revenue in the first quarter of ongoing fiscal year.

The brokerage firm forecasts 7.7 per cent revenue growth in constant currency term in FY24 on the back of strong order book, deal pipeline, and expectation of a broader technology recovery during the second half of this fiscal.

However, the company is expected to post better margins in the coming quarter, indications of which are already available in the first quarter performance. For April-June period, operational efficiencies, particularly utilisation supplemented the margin profile. The IT firm reported an improvement in its utilisation level to 84.8 per cent in Q1 of FY24 from 81.7 per cent reported in the previous quarter.

During the quarter, order book of the company stood at $1.4 billion, which was higher by 4 per cent on sequential basis.

“LTIMindtree management mentioned Q2 of FY24 would be better than Q1 in terms of revenue growth but not robust,” the brokerage firm wrote in the note.

The company is also likely to receive merger-related synergies, helping it to bag more outsourcing contracts.

During the quarter, most large IT firms have posted subdued growth in revenue with improvement in margin. While attrition has started to trend down, overall hiring activity during the first quarter remained weak.

LTIMindtree also reported dip in its total headcount as merger-related synergies started to kick up.