LTIMindtree Delivers 5.2% YoY USD Revenue Growth

Strong order inflow of USD 1.3 billion; marks a YoY growth of 20%

LTIMindtree [NSE: LTIM, BSE: 540005], a global technology consulting and digital solutions company, announced its consolidated results, on Thursday, for the second quarter ended September 30, 2023, as approved by its Board of directors.

“Our results in the second quarter were highlighted by strong revenue growth of 5.2% YoY, in USD terms, along with a healthy operating margin of 16% despite wage hikes across the organization. This all-round performance, in a challenging business environment, demonstrates the strength of our capabilities and disciplined execution.

Our robust order inflow at USD 1.3 billion, representing a 20% increase YoY, and growth across our client bands speaks to the strength of our client relationships, robust delivery and our ability to address the priorities of our clients across their efficiency and transformation mandates”, said, Debashis Chatterjee, Chief Executive Officer and Managing Director

Key financial highlights:

Quarter ended September 30, 2023

In USD:

• Revenue at $1,075.5 million (growth of 1.6% Q-o-Q / 5.2% Y-o-Y)
• Net profit at $140.4 million (growth of 0.2% Q-o-Q / decline of 5.0% Y-o-Y)

In INR:

• Revenue at ₹89,054 million (growth of 2.3% Q-o-Q / 8.2% Y-o-Y)
• Net profit at ₹11,623 million (growth of 0.9% Q-o-Q / decline of 2.2% Y-o-Y)

Other highlights:

Clients:

• 737 active clients as of September 30, 2023
• $10 million+ clients increased by 13 on a Y-o-Y basis, total 90
• $20 million+ clients increased by 3 on a Y-o-Y basis, total 41
• $50 million+ clients increased by 3 on a Y-o-Y basis, total 14

People:

• 83,532 professionals as of September 30, 2023
• Trailing 12 months attrition was 15.2%

Deal Wins

• One of the largest semiconductor manufacturers in the world has chosen LTIMindtree as their key digital transformation partner to modernize its SAP application landscape, enrich user experience, streamline business processes, and deliver contemporary digital operations across both SAP S/4HANA and SAP Cloud Solutions.
• A leading US-based apparel retailer with over 900 stores has selected LTIMindtree for multi-year managed services deal for Application and Infrastructure services.
• A US-based insurance and retirement major has awarded LTIMindtree with a multi-year application development and maintenance program. This program comprises 500+ applications across different services: Development, Testing, and Maintenance.
• A US-based global fast-casual restaurant chain chose LTIMindtree as their strategic Digital Transformation partner, to provide Application Development & Support, Data & Analytics, Quality Engineering & Assurance Services.

Partnerships

• LTIMindtree achieves Top tier GSI partnership with Informatica, a global leader in MDM and Data Management space. Together, we empower organizations to achieve data excellence @speed and @scale by building modern data platforms on cloud.

Recognitions

• Recognized as a ‘Leader’ in Everest Group’s Payments IT Services PEAK Matrix® Assessment 2023.
• Recognized as a ‘Major Contender’ and ‘Star Performer’ in Everest Group’s Digital Twin Services PEAK Matrix® Assessment 2023.
• Recognized as a ‘Major Contender’ and ‘Star Performer’ in Everest Group’s Data and Analytics (D&A) Services PEAK Matrix® Assessment 2023.
• Recognized as a ‘Major Contender’ in Everest Group’s Digital Workplace Services PEAK Matrix® Assessment 2023 – North America
• Recognized as a ‘Major Contender’ in Everest Group’s Life Sciences Smart Manufacturing Services PEAK Matrix® Assessment 2023.
• Recognized as a ‘Major Contender’ in Everest Group’s Digital Workplace Services PEAK Matrix® Assessment 2023 – Europe
• Featured in Forrester’s Commerce Services Landscape, Q3 2023.
• Recognized as a ‘Major Contender’ in Everest Group’s Cloud Services PEAK Matrix® Assessment 2023 – North America
• Recognized as a ‘Visionary’ in the 2023 Gartner® Magic Quadrant™ for Public Cloud IT Transformation Services.

*GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant is a registered trademark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.
Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Announcements

The Board of Directors have approved an interim dividend of ₹20 per equity share of par value ₹1 each.

Mindtree and LTI Announce Merger to Create "LTIMindtree" India’s Next Large-Scale IT Services Player

The Boards of Directors of Mindtree and LTI at their respective meetings held today approved a composite scheme of amalgamation of both these independently listed IT services companies under the Larsen & Toubro Group. The proposed integration will see Mindtree and LTI join strengths to create an efficient and scaled up IT services provider exceeding $3.5 Bn. The transaction is subject to shareholder and regulatory approvals.

Both Mindtree and LTI have delivered market-leading financial performance and created value for shareholders. Given that recent industry shifts (e.g., prominence of large deals, preference for end-to-end offerings) are benefitting at-scale players, the two companies have decided that the time is appropriate to combine the strengths of both organizations to better serve the customers.

Significant scale benefits are anticipated through Mindtree and LTI’s complementary strengths resulting in a stronger portfolio of offerings across verticals. Enhanced customer engagement and delivery model through industrialization of delivery and streamlined value-enabling processes is expected to result in improvement in large deal capabilities. These opportunities will create a more distinctive employee value proposition and stronger partnerships with ecosystem players.

Upon the scheme becoming effective, all shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree. The new shares of LTI so issued will be traded on the NSE and BSE. Larsen & Toubro Limited will hold 68.73% of LTI after the merger.

For now, the companies will continue to function independently. A Steering Committee will be constituted to oversee the transition till the merger process is complete. The name of the combined entity will be “LTIMindtree” leveraging the advantages of both the brands and creating value for all the stakeholders.

Speaking about the merger, A. M. Naik, Chairman, Mindtree, said, “This merger represents our continued commitment to grow the IT services business in line with our strategic vision. The highly complementary businesses of Mindtree and LTI will make this integration a ‘win-win’ proposition for 
our customers, investors, shareholders, and employees."

Speaking about the merger, S. N. Subrahmanyan, Vice Chairman, Mindtree, said, “We are confident that the proposed merger will help us build on the combined strengths of both these organizations to unlock synergies through scale, cross-vertical expertise, and talent pool. This will help us emerge as a partner of choice for large-scale tech transformations and create a distinctive employee value proposition.”

Advisors

• KPMG India Services LLP acted as financial advisor to Mindtree.
• SA (Advocates and Solicitors) acted as legal advisors to Mindtree.
• Goldman Sachs (India) Securities Private Limited provided fairness opinion to Mindtree on the valuation done by the valuer for the proposed transaction.
• Ernst & Young Merchant Banking Services LLP were appointed as valuers by Mindtree.

Mindtree Co-Founders Launching ₹ 120 Cr Startup Fund

Four months after resigning from technology consulting firm Mindtree's company board and executive roles, the co-founders of the Indian MNC -- Krishnakumar Natarajan, N S Parthasarathy and Rostow Ravanan are on verge of launching a ₹ 120 crore startup fund to invest in start-up companies working in the areas of Internet of Things (IoT), analytics and digital, reported Times of India citing its sources.

According to the report, the upcoming startup fund, which is awaiting market regulator SEBI’s approval, would be structured as an alternative investment fund (AIF), a privately pooled investment fund in the form of a trust or a company or a limited liability partnership (LLP).

One of the very first unicorn startups from India, Mindtree was founded by Natarajan, Parthasarathy and Ravananin in 1999 followed by becoming a public company in December 2006 and got listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

In June 2019, Larsen & Toubro, an infrastructure major and one of the largest conglomerates in India, took over control of Mindtree by acquiring 52.8% shares in the company.

Started itself as an innovative startup, Mindtree was funded by the venture capital firms Walden International and Sivan Securities, and later in 2001 from the Capital Group and Franklin Templeton.

Apart from the fact that Mindtree's co-founders have been investing in startups in their personal capacity, Mindtree had made a few acquisitions as well. In June 2005, Mindtree acquired Linc Software. Prior to that in September 2004, it acquired the software division of ASAP and ARPSL.

Besides being an advisor in TVS Capital Funds, Natarajan had earlier invested in crowdfunding platform 1Crowd, as well in logistics tech startup Truckola, in July 2016.

Indian IT firms Contributed Massive $57.2 Bn to the US GDP in 2017 - Top Diplomat

In July 2018, Indian IT company Mindtree has given US$2 million grant to Stanford University, and Tata Consultancy Services (TCS) launched an education initiative in 2017 called "My Future in School". In September 2018, Infosys partnered with Trinity College on Applied Learning Initiative, while WIPRO has partnered with US-based nonprofit social enterprise, First Book, to distribute over 200,000 books by 2019-end. These are some of the examples of contribution by Indian IT companies to the United States besides business operations in the US, mentioned by Harsh Vardhan Shringla, India's Ambassador to the US.

Indian IT companies contributed USD 57.2 billion to the GDP of the US in 2017, India's top diplomat in the US said on Tuesday.

Addressing business leaders in Denver, Colorado, Shringla said India-based global IT services companies employ more than 175,000 workers in the US accounting for 8.4 per cent of employment in the computer systems design and related services industry.

In his address at the 2019 State International Development Organisation (SIDO) Conference on “US-India Trade and Investment: Opportunities and Best Practices,” Shringla said Indian IT companies in the US are deeply embedded in the roots of American society and their contributions have exceeded far beyond the economy.

Shringla said the two-way investments between India and the US reached about USD 60 billion.

The US with USD 45 billion cumulative investment is the sixth source of foreign investment in India, he said in his address to State International Development Organization annual (SIDO) convention's India event organised in partnership with US India Business Council (USIBC).

SIDO is the only American organisation that is focused on state international trade development.

"The US-India relationship is at a critical juncture and needs to evolve with the changing landscape of US global trade relations. State-to-state ties help Indian companies investing in the US and US companies who need support at the ground level in India," said USIBC president Nisha Desai Biswal.

India under Prime Minister Narendra Modi, he said is taking steps to ensure that US investments into India is taken to new levels by ensuring profitability as well as protection of Intellectual Property.

Through India's National IPR policy since its launch in 2016, the government has been working actively to promote IPR awareness and augment technical manpower to simplify the patent procedures and reduce pendency in patents and trademarks, he said.

It has completed 50 enforcement workshops for police officials across 26 states and union territories. An IPR enforcement toolkit has been prepared to serve as a ready reckoner for policy officials. Enforcement of intellectual property in India is one of the major concerns of American companies.

India, he asserted, has made strides across various sectors. The fact that India has jumped 65 places in four years to reach 77th position on the World Bank's Ease of Doing Business ranking and 52nd rank in the Global Innovation Index are just some of the global indices reflecting India's emergence as a hub for innovation and manufacturing.

“This is in line with Prime Minister Modi's 'Make in India' initiative. India is currently home to the world's 4th largest auto industry and 3rdlargest domestic civil aviation market,” he said in his address PTI LKJ