Earnings call transcript: LTIMindtree Q1 2025 sees stock surge on strong earnings

LTIMindtree Ltd reported robust financial results for the first quarter of 2025, with significant year-over-year growth in revenue and a notable increase in stock price. The company’s shares rose by 5.01% following the announcement, reflecting investor confidence in its strategic initiatives and market position. According to InvestingPro data, the company maintains a "GREAT" Financial Health Score of 3.28, supported by strong liquidity metrics and moderate debt levels. Despite macroeconomic uncertainties, LTIMindtree’s focus on AI-driven services and operational efficiency has bolstered its performance.

Key Takeaways

• LTIMindtree’s annual revenue grew by 4.8% in USD terms, reaching 4.5 billion.
• The stock price increased by 5.01% post-earnings announcement.
• The company reported a full-year order inflow of 6 billion, a 6.1% year-over-year increase.
• Strategic initiatives include AI-led service delivery and a new go-to-market strategy.

Company Performance

LTIMindtree demonstrated solid performance in Q1 2025, with a 5.8% year-over-year growth in quarterly revenue, amounting to 1.33 billion. The company’s focus on AI-driven technology modernization and operational efficiency through its "Fit for Future" program has positioned it well in the competitive landscape. InvestingPro analysis shows the company maintains an impressive current ratio of 3.34, indicating strong financial flexibility. Its strong presence in the BFSI, technology, and manufacturing sectors contributed significantly to its revenue, with a sustainable 5.14% revenue growth over the last twelve months.

Financial Highlights

• Annual Revenue: 4.5 billion (4.8% growth in USD terms)
• Full Year EBIT Margin: 14.5% (120 basis points decline YoY)
• PAT Margin: 12.1%
• Full Year Order Inflow: 6 billion (6.1% YoY increase)
• Cash and Investments: 1.56 billion
• Q4 Revenue: 1.33 billion (5.8% YoY growth)
• Return on Equity: 21.5%

Market Reaction

Following the earnings announcement, LTIMindtree’s stock surged by 5.01%, closing at a price of 4,320.4. This movement is significant, especially considering the stock’s 52-week range, with a low of 3,802 and a high of 6,767.95. Based on InvestingPro’s Fair Value analysis, the stock currently appears undervalued, trading at a P/E ratio of 29.29. The positive market reaction reflects investor optimism about the company’s strategic direction and growth prospects, supported by its impressive 23% return on equity.

Outlook & Guidance

Looking forward, LTIMindtree aims for industry-leading growth, with expectations of margin improvements from Q1 FY26. The company is focusing on sales transformation, simplifying its service line sales structure, and enhancing operational efficiency through its "Fit for Future" program. InvestingPro subscribers can access 12 additional key insights about LTIMindtree, including its 9-year dividend payment streak and comprehensive financial health analysis. Despite macroeconomic uncertainties, LTIMindtree remains confident in navigating challenges with its AI-driven initiatives.

Executive Commentary

Venu Nambu, CEO Designate, emphasized the company’s strategic focus, stating, "We see the current phase of technological transition and macro issues as another opportunity." He also noted, "Our endeavor is actually to drive the profitable growth," highlighting the company’s commitment to maintaining robust financial performance.

Risks and Challenges

• Macro uncertainties could impact future performance.
• A decline in European market growth poses challenges.
• Maintaining competitive advantage in AI and technology modernization.
• Managing attrition rates while scaling operations.
• Navigating vendor consolidation trends.

The company’s strategic initiatives and strong financial performance have positioned it well to tackle these challenges, with a focus on leveraging AI and operational improvements to maintain growth momentum.

Full transcript - LTIMindtree Ltd (LTIM) Q4 2025:

Conference Moderator: Ladies and gentlemen, good day and welcome to LTI Mindtree Q4 FY twenty twenty five Results Call. Please note that this conference is being recorded. I will now hand the conference over to Mr. Vivekas Zadar, Head Investor Relations, LTI Mindtree. Thank you and over to you, sir.

Vivekas Zadar, Head Investor Relations, LTI Mindtree: Thanks, Rudraja. Good evening, everyone. Welcome to LTI Mindtree’s quarter Four FY ’twenty five Earnings Conference Call. Today on the call, we have with us Mr. Deepashish Chatterjee, Chief Executive Officer and Managing Director Mr.

Venu Nambu, Chief Executive Officer Designate Mr. Nachigyat Deshpande, President, Global AI Services, Strategic Deals and Partnerships and Mr. Vipul Chandra, Chief Financial Officer. We’ll begin by providing a brief overview of the company’s quarter four and FY ’twenty five performance, after which we’ll open the floor for Q and A. During the call, we could make forward looking statements.

These statements consider the environment as we see today and carry risks and uncertainties that could cause our actual results to differ materially from those expressed in today’s call. We do not undertake to update any forward looking statements made on the call. I now turn the call over to B. C. For his opening remarks.

Deepashish Chatterjee, Chief Executive Officer and Managing Director, LTI Mindtree: Thank you, Vikas. Good evening and good morning to everyone and thank you for joining us today. To start with, I’m pleased to mention that on the earnings call today, we are joined by Venu Lambo, who has rejoined us as CEO designate on twenty fourth January. Venu has worked closely with me for over a decade in the past. Since joining, he has gained deeper insights into the company’s current operations and strategic planning.

Will continue to focus on driving growth and enhancing stakeholder value. While I cover the performance highlights for FY twenty twenty five, I would request Venu to provide his perspective on the business outlook later. In terms of yearly performance, FY twenty twenty five was a period of consolidation characterized by growth in our key verticals, growth across top customers, large deals traction and significant progress in AI leverage deals. Despite robust revenue growth in the first half of the year, momentum slowed in the second half due to macro uncertainties. Nonetheless, as a strategic partner, we maintained close relationships with our customers and supported them in their cost initiative programs, which further consolidating while further consolidating our position with them.

Overall, we achieved constant currency revenue growth of 5% compared to 4.2% in FY 2024. Revenue totaled US4.5 billion reflecting a growth of 4.8% in U. S. Dollar terms. The strategic alignments with our customers have resulted in a robust order inflow this year.

We recorded a Q4 order inflow of US1.6 billion dollars marking the second consecutive quarter with over US1.5 billion dollars in orders. The total order inflow for FY 2025 stood at US6 billion dollars representing a 6.1% year on year increase. This exhibits our capability to continue to adjust our portfolio from a higher discretionary mix to longer term efficiency driven deals. Operating margins for the year stood at 14.5%, a decline of 120 basis points year over year. At the end of Q4 and FY 2025, our total headcount stands at 84,307, reflecting a net year over year addition of 2,657 employees.

Attrition remains stable at 14.4%. Collaboration between academia and corporates is critical in times of technological transition. As a step towards this, we

: are

Deepashish Chatterjee, Chief Executive Officer and Managing Director, LTI Mindtree: excited to share that ATI Mindtree has partnered with the Indian Institute of Management Mumbai to introduce the postgraduate program for executives in AI led experience design. This year, this year long program is designed to equip professionals with cutting edge skills in customer experience design by leveraging the transformative capabilities of artificial intelligence. At LTI Mindtree, we believe that true operational excellence is measured not only in metrics, but also in the trust we build with our clients. I’m delighted to share that our CSAT score improved to 5.98 in FY 2025 from 5.85 in FY 2024, well above the industry average. I’m glad to see LTI Mindstream being included in the S and P Global Sustainability Yearbook 2025.

This inclusion marks the first time we have been featured in the S and P Sustainability Yearbook and reflects our ongoing commitment to sustainability and transparent practices. The ongoing AI led technology transition is enabling us to capitalize on new opportunities across various industries. Let me take you through some of the key wins in Q4. A leading U. Life insurance company has engaged us to enhance its quality processes using AI to improve the operating model, thereby advancing enterprise quality engineering maturity.

This is a multiyear deal, which will focus on enhancing quality engineering practices and leveraging AI to transform the operating model. We have been chosen by a global reinsurance group to enhance efficiency through an AIOps model as part of its end to end outsourcing deal. A leading digital company in The Kingdom Of Saudi Arabia region has interested us with the providing end to end operations services for their hybrid cloud security platform. We have been selected by a global entry major to provide next gen ERP support services across multiple functional and SaaS based solutions. Our year end deal pipeline continues to remain robust.

Next, I will discuss our industry verticals performance. Our primary verticals, BFSI, Technology and Manufacturing, which accounted for approximately 80% of FY twenty twenty five revenues experienced good growth this year. The Technology, Media and Communications vertical contributed 24.5% to FY twenty twenty five revenues and grew 8.7% year over year in U. S. Dollar terms.

We see continued momentum in this sector. Our largest vertical BFSI, which contributed 36.1% to FY twenty twenty five revenues, grew 4.6% year over year. Client priorities continue to revolve around regulatory commitment and data transformation for better reporting and decisions. During the year, we closed several large deals in this vertical, primarily focused on cost optimization, vendor consolidation and tech modernization. The Manufacturing and Resources vertical, which contributed 19% of FY twenty twenty five revenues, grew 7.2% year over year, aided by the large deals we signed earlier this year.

Demand was driven by vendor consolidation, ERP transformation and managed services deals. Our consumer business, which consists of retail, CPD, travel, transportation and hospitality businesses, showed flat growth year over year in constant currency terms. Retail and CPD witnessed growth during the year, while the TTH portfolio had a couple of client specific slowdowns. Our Health, Life Sciences and Public Services business, our smallest vertical, declined by 3% year over year. The decline primarily came from the Healthcare business.

In terms of geographies, North America grew by 7.1%, Europe declined by 1.2% and the rest of the world declined by 1.7% in FY 2025. I will now turn over the call to Vipul for the financial highlights.

Vipul Chandra, Chief Financial Officer, LTI Mindtree: Thank you, D. C. Hello, everyone, and thank you for joining the call. Let me take you through the financial highlights for the fourth quarter and financial year 2025, starting with the revenue numbers. We ended the fiscal year 2025 with revenue of USD 4,500,000,000.0, registering a growth of 4.8% in dollar terms and 5% in constant currency terms.

The EBIT margin for FY 2025 was 14.5 compared to 15.7% in FY 2024. The PAT margin was 12.1% compared to 12.9% in FY 2024, while the absolute PAT for the full year was INR4602 crores, an increase of 0.4% over FY 2024. Cash generation for the year continued to drive the strength of our balance sheet with operating cash flow to PAT at 98.8% and free cash flow to PAT at 78.5% for the full year. We closed the year with an all time high cash and investment balance of USD 1,560,000,000.00 or INR 13,346 crores compared to INR 12,488 crores in quarter three FY 2025. Return on equity was at 21.5.

For the fourth quarter of FY twenty twenty five, our revenue stood at USD 1,330,000,000.00, up 5.8% year over year in USD terms. The corresponding constant currency growth was 6.3% year over year. Sequentially, revenue declined by 0.7% in dollar terms and by 0.6% in constant currency. EBIT margins for Q4 were flat at 13.8% compared to Q3. Despite the sequential revenue decline, we were able to maintain margins due to improved operational efficiencies.

That margin for the quarter was at 11.5% as compared to 11.2% in Q3 FY 2025. Basic EPS was INR38.1 for the quarter as compared to INR36.7 in quarter three FY 2025. The effective tax rate for the quarter remained stable at 26.2. We remain committed to reducing our days sales outstanding as evidenced by the improvement in total DSO, which reduced by one day, bringing it to seventy nine days for Q4 versus Q3. As of 03/31/2025, our cash flow hedges stood at USD3618 million and hedges on the balance sheet were USD259 million.

Corresponding numbers for euro hedges stand at EUR145 million and EUR28 million respectively. Our utilization excluding trainees in the quarter came in at 85.8% compared to 85.4% last quarter. Our attrition continues to be stable. For the quarter, our TTM attrition was 14.4% compared to 14.3% last quarter. We onboarded over 4,700 pressures during the year, which is another step on our pyramid correction journey.

The Board of Directors has recommended a final dividend of Rs. 45 per share subject to shareholders approval, taking our overall dividend for the full financial year to Rs. 65 per share. Our commitment to sustainability remains a steadfast. Let me outline some of our accomplishments on this front.

I’m pleased to announce that LTI Mindray received the India Green Award 2025 for demonstrating best practices and achievements in sustainability reporting. LTI Mindray was also awarded the prestigious Zero Waste to Landfill Certification for two of our Mumbai offices in Pauai and Mahape. We proudly stand as the only Platinum Award winner in the sustainability report category within the technology IT services sector. This achievement underscores our leadership in sustainable practices within our industry. LTIMA Indri attained the Global Leadership League in CDP Climate Change twenty twenty four for the fifth year in a row.

I’m also pleased to report that CRISIL has reaffirmed its rating on the company’s bank facilities as CRISIL AAA stable and short term facilities at CRISIL A1 plus I would now like to invite Venu to share his thoughts.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you, Vipul. I’m very excited to rejoin LTM Mindtree. The transition has proceeded smoothly, and it has been a rewarding experience collaborating with DC once again. Over the past ninety days, since my rejoining, I’ve tried extensively to various locations, engaging with both employees and customers. I have participated in over 100 meetings involving customers, industry experts, partners and investors.

These engagements across stakeholders over the past ninety days have been quite reassuring and reinforced my commitment to value creation at LGMI Tree. The recent macro uncertainties will take their own course. Over the past two decades, we have faced various challenges and emerge stronger each time. We see the current phase of technological transition and macro issues as another opportunity and are confident in our ability to thrive. I would like to outline three key initiatives that we have prioritized as we move into FY 2026.

The first initiative is sales transformation. This centers around simplifying the service line sales structure, strengthening leadership in high potential businesses, reimagining value creation with our partners and customers and exploring new sales models in the AI economy, targeting a larger portion of clients’ cost base than just IT. As we move into this AI driven economy, clients are increasingly seeking multi service, multi delivery and multi geographical solutions. This significant shift in demand necessitates the development of an innovative playbook, prompting us to revamp our large deal organization. The framework for this organization in the context of AI differs significantly from the traditional methods.

It focuses on proactive integration of new age technologies into clients’ IT system as well as our own service delivery processes. To boost our scalability in this evolving landscape, we have devised a robust go to market strategy spearheaded by Nachiket Deshpande, President of Global AI Services, Strategic Deal and Partnerships. Nachiket will now be based in U. S, and his experience across the value chain will help him in delivering integrated solution that resonate deeply with clients’ evolving needs. While the first two initiatives focuses on revenue maximization, the third initiative, Fit for Future, primarily aims at enhancing agility and profitability.

It involves rebased planning of our operational cost, both direct and indirect. The goal is to relook at the existing team structures and alignments, processes and reshape them towards extra reducing the extra layers where possible, leading to an agility and operational efficiency with the innovative use of AI. The program will target productivity improvement in all areas, like sales, delivery and business enablement units, maintaining an optimal and efficient bank processes. And it’s also optimizing span of control and etcetera. It should start yielding results through the margin improvements during the year.

In conclusion, we are confident about navigating the macro challenges as we move into executing our growth plan for FY 2026, and we expect our Fit for Future program to help improve the margins from Q1 onwards. With that, let me now open the floor for questions.

Conference Moderator: Thank you very much. We will now begin the question and answer session. The first question is from the line of Silab Govila from Morgan Stanley. Please go ahead.

: My perspective is from an organization point of view, the changes that you are you highlighted, would you say that these changes have already been in place with especially with respect to people? Or you think that, that is something that will take some time to play out? And secondly, within that, the areas that you mentioned about sales transformation as well as targeting margins, What among these could be some of the quick wins that you will target in the first year? And what could be some of the longer areas that you will pursue?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: So look, I think on the first part, the organization structure is final. I think the organization that was in place, we’re just strengthening that, improvising in the areas of where we need to do it, but the focus is actually to continue and accelerate the momentum. That’s number one. The second thing, the areas that I spoke of with regard to the Feed for Future program, they are some of these initiatives are already running as I entered into the organization. It’s just that I brought it under one overarching umbrella and overarching program and driving with that governance and focus.

So it’s something which is already work in progress. So it’s not something that we have started in fresh. It’s just that it got extra

Vipul Chandra, Chief Financial Officer, LTI Mindtree: got expanded a bit in the last quarter.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Did I miss out the other question? Okay. Which ones will give results with regard to the second part of the question on the sales transformation? Our expectation is that both should start giving good, good results, right? Again, sales transformation is not about overhauling this sales structure.

It’s about getting better on what we are doing. I think there is a chance to improvise our playbook as the client expectation changes, and that’s what we are focusing on. So the word transformation may look like a big theme, but you should read it as an improvisation from the overall sales effectiveness standpoint. And we’re confident of start getting some quick results on both these initiatives.

: Understood. Thanks for that comprehensive answer. Second is, the outlook on the top two clients that we have, given that especially on the high-tech client, should we expect the productivity benefit pass on phase to be over? And one should expect that plan to grow this year? And in the banking client, given the changes that client is pursuing internally, what areas would you think are relatively protected and what could be at risk?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Look, I think on the first part, on the productivity part, I think as D. C. Would have briefed in the Q3, that’s been factored already in the Q3 and Q4 quarter. So that’s the end of the initiative we are driving, and we are happy that we successfully delivered those benefits to our customers. So that’s sort of a closed topic in that regard.

And look, it’s a customer where we had a relationship over the many years, and we’ll continue to work with them in developing new capabilities and areas to grow. The second one is you asked a question with regard to the banking. Look, I don’t want comment very client specific news that you’re talking about, but I can only say that we continue to see an increased opportunities in our clients across all the top clients that we’re engaged with. So I don’t see any immediate risk on that.

: Understood. Understood. And last one from me. With respect to the current demand environment and visibility that you have, so the macro uncertainty that’s been playing out over the past few weeks, would you say that has had a month some impact in the month of March and that’s continuing in April or you’ve not seen anything like that in the past few weeks?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Look, I’ll comment on that. D. C. Can add if you have anything strong that. Look, I think the uncertainty is that, that was there in Q4.

I don’t think it has disappeared as we step into the Q1, right? So I think it still persists in various forms and shapes. So that’s one part of the answer with regard to where the uncertainty lies. The second is where do we see the demand outlook coming from the client? I would say that it’s predominantly coming from the three areas, right?

Even the clients are navigating the same uncertainties that we are navigating. So they’re looking for opportunity to save cost. So there are opportunities where we can help customers in cost saving opportunities. The second is this is also an opportunity for our clients to actually simplify their vendor landscape. So there is a huge vendor consolidation demand out there.

So it’s an opportunity for us to be competitive and get a bigger share of that. And the third is that as most of our clients navigate to the AI economy, they need to modernize their tech as well, right? So especially if you want to pivot it at scale at AI, it requires a tech modernization. So these are the three sort of an archetypes of demand that we see, which are pretty much contextual to the uncertainties that even our clients are navigating it.

: Understood. Thanks for taking my question and all the best for this financial year.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you, Suraj.

Conference Moderator: Thank you. The next question is from the line of Abhishek Bandari from Nomura. Please go ahead.

Abhishek Bandari, Analyst, Nomura: Yes. Thank you for the opportunity. I had a few questions. So, Vedul, welcome back. From the time you left LTI, the time you’ve rejoined and the last three months you’ve spent in the company, what are the areas you think have changed where there’s a need for a negative assumption?

And what are some of the areas where you think things have improved since the time you have? The background of this question is some of the expectations what investors had in terms of growth being A plus B after the merger have been clearly played out. So answer would be like to go.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Yes. Firstly, Abhishek, thanks for welcoming me back. Look, on your question, to be honest, I don’t think it’s fair for me to analyze that way because I was there only one month after the merger. So it’s very difficult for me to have a reference point and do that. But we also need to understand, I’m sure you appreciate that the market we were talking two years or even three years back is completely different from the market that we talked today.

The client expectations have changed, right, and their spend areas have changed. And with that, even the technology advancement, right, and the kind of AI conversation we could have had two or three years back versus today has fundamentally has changed. So that’s how the how I look at from an external standpoint. But from an internal standpoint, it’s the same organization. I have a very talented team and great leadership, and we are all passionate and determined to deliver the growth.

So I at least on that aspect, can assure you there’s nothing that I’ve seen a different change. If not anything, probably I would have seen more hunger and more passion to deliver growth. Thanks to DC for that. Did I answer your question, Abhishek?

Abhishek Bandari, Analyst, Nomura: Yes. Partly, I think maybe in coming quarters, we’ll have any more clarity on the strategy and how it’s built out. I appreciate it just in a few months ago. Second question is on the headcount number. In this quarter, we had a very sharp headcount reduction.

So maybe if you could guide us how one should think about the linkage between your expectation on growth and headcount addition going forward?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Nachiket, Anja?

Nachiket Deshpande, President, Global AI Services, Strategic Deals and Partnerships, LTI Mindtree: Yes. So this quarter, if you actually see the reason for a sharp decline in the headcount was it sort of should be seen in the context of Q2 and Q3 where we had built aggressive headcount increase in the anticipation for the growth and we kind of worked on deploying that in Q4 and hence you see the net headcount reduction. But going forward as the AI led productivity starts to play out, Abhishek, we would expect that the headcount growth may not be linear with the revenue growth that we seek. So there would continue to be that play as we go along as the AI adoption increases across our services.

Abhishek Bandari, Analyst, Nomura: Got it. Thank you for that, Nachiket. And my last question is, should we expect the usual seasonality for you to play out even in FY 2026, this is the order book closure and the pipeline what you have? Or is it slightly different this time given the macro world?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: So Abhishek, we could not hear the first part of the question. Could you repeat that, please?

Abhishek Bandari, Analyst, Nomura: Should one expect the usual seasonality of your business to play out in FY 2020 basis, business the order book closure what you have and the pipeline you have? Or you think the pattern could be different this year because of the uncertain macro?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Well, the seasonality variation that you see in our quarters from the last year, I think, in my view, it will be more or less the same, right? If at all, if there is anything that we can add on top of it is that is our ability to respond to the clients’ new types of demands and helping them in all the three years that I mentioned. So that we need to see how that gets played out. And also how long this uncertainty environment stays throughout the year. So those are the two sort of variables outside, I would say.

Abhishek Bandari, Analyst, Nomura: Got it. Thank you, Benjamin. All the best. And J. P.

Thank you for your time in the company.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you. Thank you, Amishi.

Conference Moderator: Thank you. The next question is from the line of Sandeep Shah from Equita Securities. Please go ahead.

Sandeep Shah, Analyst, Equita Securities: Yes. Thanks for the opportunity. You spoke about the client specific issue in terms of both high-tech as well as in BFSI. Apart from that, is there any other client specific issue, especially in a vertical like insurance or in travel, transportation and hospitality, where vendor consolidation, we may win some, we may lose some?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Look, firstly, Sandeep, I don’t think I spoke about any issue as such. If at all, I actually gave an assurance that the productivity part of our top client, that we have executed successfully, so we don’t see that flowing into the Q1. That’s the point one. And second thing was with regard question was regard to the banking client, where my commentary was more about how we continue to see opportunities with our clients as we go along. So not sure if I missed the context, but there are no specific issues that I highlighted.

Sandeep Shah, Analyst, Equita Securities: No, no. Outside of these two, what I wanted to know is, is there any top client specific issue in travel as well as in terms of insurance because of California fire and exposure of some of our clients more towards California?

Vivekas Zadar, Head Investor Relations, LTI Mindtree: Hello?

Vipul Chandra, Chief Financial Officer, LTI Mindtree: Hello?

Conference Moderator: Ladies and gentlemen, please stay connected while we disconnect the management. Ladies and gentlemen, thank you for patiently holding. The management line is reconnected. Over to you, sir.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Okay. Thank you. Sandeep, sorry, the line got disconnected all of a sudden. Look, think yes, with regard to your questions on insurance and travel, look, I think travel, as we called out, there were a couple of client specific instances that had an impact on the FY 2025 numbers. And these are the clients that are actually planning new initiatives.

At least I could sort of say that in the near future, there are no other new impact on those clients that this was already taken care in FY 2025. In terms of the further demand outlook from those clients, we are to just wait and watch for some more couple of quarters

Sandeep Shah, Analyst, Equita Securities: And just a strategic question, Venu, when you are joining back the company, there has been a dual problem in terms of growth being lower versus what it used to be LTI Mindtree versus peers. And second, margins are also at a very low level despite some of the levers have been used out in the last three to four years. If you look at gross margin, it’s at all time high and it’s one of the lowest in the industry. So in terms of focus, do you believe driving both the initiative concurrently could be a difficult job and you might have compromised one for the other? What is your strategy in regards to this?

And second, as a clarification in terms of service line transformation. So is it one can understand the GTM model may change from vertical focus to service line focus?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: No. Firstly, let me clarify that part. No, it doesn’t mean that. What it means is that the clients are consuming services service capabilities in a different way these days, Sandeep, right? It’s no more consuming a part of one service line or anything.

Most of the construct, whether it’s the tech modernization, cost saving or the AI kind of a need, it was more than one service line. So when I spoke about simplifying, it’s about making sure that we become more agile and become more competitive in the way we address the market with regard to the service line sales capability. That’s what that’s the first part of it. And second thing is that with regard to playing on both tracks of revenue and margin, I think it’s something we have the capability. It’s not the first time we would have addressed these challenges, right?

So we have all the capabilities and we have the teams who can navigate this both. And our endeavor is actually to drive the profitable growth. So hence, we need to get both. I don’t think you can get the profitable you can get the profit towards just cutting the cost. So you need the revenue and the volume as well.

So it goes both hand in hand. I know it’s a it’s always looks challenging, but I think that’s where we have a great leadership team in place to deliver that.

Sandeep Shah, Analyst, Equita Securities: Okay. Thanks. Congratulations, Venu, and all the best.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you.

Conference Moderator: Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead.

Sandeep Shah, Analyst, Equita Securities: Hi, thank you for the opportunity and congratulations and waiting for rejoining LTI MIT. So my question was with regards to the commentary that was provided post your third quarter results, where you were quite optimistic about sustaining the growth momentum driven by a combination of factors. If you can talk about where were you negatively surprised in terms of verticals with the way how Q4 panned out? And the second question is with regards to a sales transformation that you’re talking about. We’ve seen a number of exits in organization in the course of recent months.

Could you talk about how you could look into backfill some of these positions and the likely guidance to it? Thank you.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Yes. I think the first part is because we see the comment and come back on the sales perspective.

Deepashish Chatterjee, Chief Executive Officer and Managing Director, LTI Mindtree: So Manik, the way to look at it is that we had a strong growth in Q2 and we also saw good order inflow in Q3, which kind of made us believe that the volumes are going to coming for which there will be good growth in terms of Q4. But obviously, multiple factors, mostly macros, as you are aware of, which kind of played a role in terms of two aspects. One is many of the deals that we closed, which were supposed to start, they did not start in the same way. There were the ramp ups were delayed. And secondly, some of the deals which were expected to close in Q4, they also kind of got carried forward into the next quarter.

So these are some of the factors that did not play out the way we had anticipated. We that is why you will see that there was a well planned in terms of if you look at the intake for Q3 and Q2 and Q3, the intakes were high, but we could not really ramp up the way we wanted. But of course, the good news is that some of those deals will get closed in this quarter. So you will hear about it as we go along. But otherwise, I mean, is why the growth momentum could not continue though we had anticipated.

And on the sales transformation, let me hand it over

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: to Vin. Thank you, D. C. Look, I think on sales transformation, as I mentioned, it is more about getting a better version of ourselves in the context of the new playbook or in the new AI economy, right? So that means we already have a great sales team and we have a very effective way of managing our client relationship.

And we’re sort of infusing with the new playbook that is needed in the context of AI economy. So that’s how I look at the sales transformation. And all of our industry leadership, I think, is constant and is steady. So there’s been no exits in that part of the organization. And one or two exits that we had, we have backfilled it very successfully.

The growth office, consolidated under one leader now, we have a global Chief Growth Officer. And we also integrated the vertical delivery as well under one single Chief Delivery Officer. So I don’t think we have any risk with regard to the exit. In fact, we have a good interest for the leadership in Fusion as we start growing as well.

Sandeep Shah, Analyst, Equita Securities: Sure. If I can chip in with one more question. This question was for Vipul. With regards to our fit for future program, we’re talking about some of the easy wins come through very quickly in FY 2026. If I look at your cost split up over the course of FY 2025, we have seen our non manpower expenses come off meaningfully over the course of last couple of quarters.

If you can talk about what exactly has driven some of those efficiencies and how should we be thinking about these expenses on a go forward basis?

Vipul Chandra, Chief Financial Officer, LTI Mindtree: So think, Abhijit, as we said that under Fit for Future program, we are targeting agility and cost optimization and there are many tracks in that program that we are simultaneously focusing on. So some of the tracks which have started yielding results are in terms of the overhead side, which you have seen and you have yourself commented on in the SG and A side. I think some of the other initiatives which are going to start playing out will be in the manpower cost area also as we address the span of control and also the optimization and driving the efficiencies in the workforce management process and the talent process. And we are also as we are adopting AI more and more, we have already said that increase in headcount versus revenue may not be linear going forward. So I think all of these levers playing together is what we are looking at.

Some of them have already been in place. Some of them will start kicking in further now.

Sandeep Shah, Analyst, Equita Securities: Sure. And any targets or any timelines that you’re giving to the margin improvement aspiration?

Vipul Chandra, Chief Financial Officer, LTI Mindtree: Abhishek, as you know, we don’t give a guidance per se for the future. But I think in terms of the timelines or impact that will be visible through the quarters in FY ’20 ’20 ’6 as we go along.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: It’s a journey, which will start getting visible from Q1 onwards.

Sandeep Shah, Analyst, Equita Securities: Sure. Thank you.

Abhishek Kumar, Analyst, JM Financial: All the

Sandeep Shah, Analyst, Equita Securities: best for the future.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you.

Conference Moderator: Thank you. The next question is from the line of Ibrahim Singles from Nuva Equity. Please go ahead.

Vivekas Zadar, Head Investor Relations, LTI Mindtree0: Hi. Thanks for taking my question. Vedubhai, I had a question on the strategy that you mentioned about the various initiatives that you are taking in terms of a Chief Growth Officer and the revitalization of the employee workforce. Adi, in terms of the target that you’re looking at, I mean, these strategies to achieve that target, is there any target in our mind, a North Star maybe that we want to basically achieve this kind of a growth, if not numerical in absolute terms, in terms of relative to peers or industry, similarly on the margin side. So are there any targets or novsa that you’re looking at or if you can’t share them with us at this point of time, is there a timeline that we are looking that we would be looking to share that okay, this is what we aspire to be in excess years of time or whatever that time frame will be?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Look, I think in the short term, it’s about getting the growth in the first quarter, which I feel we are reasonably confident of achieving that, right. And in the medium term for the full year, I would not comment on any specifics, but I think I will live up to the spirit that DCA has been advocating over the years of industry leading growth. I think that’s what our endeavor will be to achieve that. But as I said, in the short term of the Q1, as I see it, think, reasonably confident of getting that growth.

Vivekas Zadar, Head Investor Relations, LTI Mindtree0: Got it. Also just a couple of questions on the Q4 mean on the outlook and just specifically on the Q4. I mean we’ve heard a lot of our peers talk about heightened level of uncertainty in the manufacturing and retail vertical. These two are key verticals for us. Of course, the impact of the uncertainty is mainly because of the tariffs.

Is that also what is kind of reflecting in our conversations with them? Or do you think nothing as of now has come up with them? And your outlook for these specific verticals, let’s say, in the near to medium term?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Actually, it’s you can’t generalize it across the sector because it depends on where the clients’ operations are, where the supply chain is, where do sell and so on. So it becomes very difficult to generalize it. But I can tell you how our demand is looking for these two sectors, right. And manufacturing, would sort of phrase it as a steady and growth oriented in the short term that is we can say. In retail, we have very exciting conversation going on, on some of the strategic deals and strategic engagement.

So there has not been material request. There is no material request that has come to us at the back of the tariff changes. But the fact about discretionary spend is still muted. Still remains the same as what it was in the previous quarters. And clients are adopting wait and watch.

But the three areas that I called out in the beginning about cost saving, vendor consolidation, tech modernization initiatives, across these three areas, specifically these two sectors, I would rephrase the way I said it. Steady and growth in manufacturing, retail, some couple of exciting engagements that we are in the discussion.

Vivekas Zadar, Head Investor Relations, LTI Mindtree0: Got Got it. Just one last bookkeeping question. The healthcare vertical though it’s a small one for us saw a very sharp decline in this quarter both on a Q on Q and Y o Y basis. We almost lost $10,000,000 of revenue on a quarterly run rate basis in this quarter. Any specific thing to call out, any client specific issue which might reverse in the next coming quarters or anything on that would be run rate?

Deepashish Chatterjee, Chief Executive Officer and Managing Director, LTI Mindtree: No, I think there is no client specific issue per se. The most of the business in healthcare is Healthcare and Public Services is project based. And there is a there are these project based business related cyclical impacts in the Public Services. That’s all about it. I mean, is definitely no customer facing issue.

Vivekas Zadar, Head Investor Relations, LTI Mindtree0: Could it be a doge impact that the government of U. S. Is leading the initiative?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Most of the work we do

Deepashish Chatterjee, Chief Executive Officer and Managing Director, LTI Mindtree: in public services are in all India. So there is no impact like that. Is no doge impact.

Vivekas Zadar, Head Investor Relations, LTI Mindtree0: Got it. Got it. Thank you so much. Thanks guys for taking my questions and wish you all the best.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you. Thank you.

Conference Moderator: Thank you. The next question is from the line of Abhishek Kumar from JM Financial. Please go ahead.

Abhishek Kumar, Analyst, JM Financial: Yes. Hi, good evening and congratulations Venu on your new role. My question is, it’s a difficult environment to execute transformation of any company. Any macro that you have kept in mind or how contingent is your transformation program on the macro? Have you baked in similar macro, any deterioration?

Or in other words, what can derail the transformation strategy or delay this?

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Okay. First, let me clarify the question with regard to the transformation, right? Let me define what are we focusing as an organization, right. So look, we have a lot of things already in place. We have great capabilities, fantastic clientele reference base and the successful engagements across many years and so on.

So

Conference Moderator: Ladies and gentlemen, please stay connected. We lost the line for the management. Ladies and gentlemen, we have management reconnected. Over to you, sir.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Thank you. Abhishek, I don’t know till where you heard me, because I could start from the beginning.

Abhishek Kumar, Analyst, JM Financial: Yes. I think it’s better if you can start from the beginning, sir.

Venu Nambu, Chief Executive Officer Designate, LTI Mindtree: Okay. All right. Thank you. Look, I think, firstly, as I said, I just want to rebaseline or contextualize the transformation question that you said, right? The way I look at it is the very fact that I come back to an organization which is familiar to me, right?

I know the people. Of course, I worked with DC for many years and Naji Gate and other leaders for quite a few years. So we’re looking at ourselves as how do we get better with our own version. I call it as can we become a better version of ourselves. So transformation may look like a very heavy lifting multiyear theme kind of a narrative.

That is not what we are at it. What we are at it is identifying specific areas where we can get better, right? And Fit for Future is, for example, is one area. I think there is an opportunity for us. We can get better at the cost, right?

And we need to get better at the cost, again, because of the macro uncertainty and also because an opportunity that AI has given us to rebaseline certain element of cost. So we’re bringing all that under one umbrella for Fit for Future. So that’s a very specific thing, not related to the external environment, hugely in our control to deliver that. The second thing is that with regard to the sales transformation that I spoke of, again, look, it’s about how do we ensure that we give newer playbook to our sales leadership, how do we give

Conference Moderator: new

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