- 20 Apr 2022
- ICICIdirect Research
LTI reports weak revenue numbers on lower on-site volumes
LTIM - 6156 Change: 23.95 (0.39 %)News: The company’s constant currency revenues were up 3.6% QoQ while dollar revenue increased 3.1% QoQ to US$570.4 mn . EBIT margins came in at 17.3% (down 60 bps QoQ), EBIT margin was impacted on wage hikes (-40bps impact) and lower working days (-60bps), while it was mitigated by lower SG&A and business mix (+40bps) . In terms of CC growth, retail, energy & utilities & Insurance reported strong growth of 7,7%, 4.1% and 3.8% QoQ, respectively, while growth in banking, manufacturing & hI-tech was relatively muted at 3.3%, 2.3%, 2.2% QoQ, respectively . In terms of geographies growth in North America was relatively muted at 2.6% while Europe reported strong growth of 8.2% QoQ. In terms of client profile Top 5 customers reported muted growth of 2.8% QoQ vs more than 6% QoQ growth in last 3 quarters. The company added 2448 employees in Q4, taking its headcount to 46K. Attrition was up 150 bps QoQ to 24%. Total dividend for FY22 was at Rs 55 per share ( 42% payout)
Views: The demand environment continued to be strong for the foreseeable future. However, the company had a cautious view for the near term on possible headwinds in terms of high energy prices, high inflation and continued geo-political tensions. LTI indicated that attrition especially onsite continue to be at elevated levels and its impacting volumes there, and it is not expected to cool off immediatly. The company added 5,200 freshers in FY22 and looking to add 6,500 freshers for pyramid optimisation which is expected to support near term margins. Another margin lever is price hike as LTI has been getting price hikes in few pockets and they expect the benefits to continue in FY23 as well albeit in gradual manner
Impact: Negative