Category
🗞
NewsTranscript
00:00 The stock in focus though is LTI Mindtree.
00:02 And let's cut across to my colleague Agam as he interviews the management of LTI Mindtree.
00:10 Client sentiment is actually very similar to what we saw in calendar year '23.
00:14 We're seeing calendar year '24 on very similar lines.
00:17 Clients are cautious about the macro environment that they're seeing.
00:22 The only difference I think is that they're getting more used to the, that this environment
00:27 is going to be there for some more time and then they're reprioritizing their spend priorities
00:32 accordingly.
00:33 Right.
00:34 So I want to talk about margins.
00:37 You know, there was expectation from the investment community where margins would be around 17,
00:42 18 percent or at least that's the aspiration at the moment.
00:45 The question really is, you know, how many quarters more would it take and perhaps what
00:50 sort of business would it take for LTI Mindtree to move back to that range?
00:56 Yeah, that 17 to 18 percent still remains our aspiration.
01:00 That's what we want to get to.
01:02 This will come through growth.
01:04 Essentially, as you can see, you know, we've been consistently talking about investing
01:07 in growth.
01:09 And actually, if you look at the overall growth metrics, you know, especially our order inflow,
01:14 again this quarter we had $1.4 billion of order inflow.
01:17 So our total order inflow in the last 12 months has been $5.65 billion.
01:23 That's 16 percent up year on year.
01:25 And that's a 1.3x to our revenue.
01:28 So I think, you know, we've got this healthy order inflow that we know is going to flow
01:32 in into this financial year.
01:34 And that's really the focus that we have, including generating obviously new revenue
01:38 and new order inflow within the year itself.
01:41 So we've got, you know, tailwind from this order inflow that we are going to focus on.
01:45 And growth is the route to delivering those aspirational margins.
01:50 So that's going to be our focus.
01:51 Right.
01:52 So, you know, there's been a lot of chatter around work from home, from what we understand,
01:56 at least some of your peers are talking about full time work from home and work from office
02:02 in comparison.
02:03 Can you tell us what your current work from office, you know, ratio is and what are your
02:10 plans at the moment?
02:12 Yes.
02:13 So we've embraced a hybrid working model and we have, you know, personas that are defined
02:18 in terms of how, where people work.
02:21 And this is actually working well for us.
02:23 We have on average, you know, two to three days a week in the office that people come
02:28 in.
02:29 And for that, we have, you know, over 90 percent adherence.
02:33 So we're doing well on that on those on that parameter.
02:37 Essentially that is to drive, you know, teamwork and collaboration, innovation discussions,
02:42 as well as give people time, you know, hybrid also allows time because we do find that productivity
02:48 does go up in the hybrid world.
02:50 And that's really what we're focused on.
02:51 So we will continue with the model that we've had.
02:54 We're also investing significantly in office space in multiple locations, for example,
02:59 in Hyderabad, in Chennai, in Coimbatore.
03:03 And this is in Calcutta.
03:04 And this is to, you know, cater for our future growth so that, you know, when people do come
03:08 to the office, they have there's enough capacity for us to do that.
03:13 Right.
03:14 So then let's talk about demand at the moment.
03:17 We want to understand, you know, what sort of incorporation is the company seeing when
03:21 it comes to discretionary spends?
03:24 Of course, there's been a lot of focus from the clients when it comes to cutting costs.
03:29 And that's where, you know, a lot of your business is coming from.
03:33 But what can you tell us in terms of trends for both these areas of your business?
03:38 Yeah.
03:39 So, you know, in fact, let me just report to our large deal pipeline, because that gives
03:43 a good indicator of where we are in terms of how the mix for demand is changing.
03:48 So our large deal pipeline is just over four billion dollars right now.
03:52 And if I look at that pipeline, you know, two quarters ago, that was 80 percent cost
03:57 takeout and 20 percent transformation.
03:59 This quarter, it is 75 percent cost takeout and 25 percent transformation, which means
04:04 there's a slight uptick in discretionary spending that we're starting to see.
04:08 But you know, the vast majority is still cost takeout.
04:12 What we like about cost takeout is what it has helped us do with this ordering flow that
04:15 we have is that it has helped us rebalance our portfolio of revenues.
04:20 So we were skewed a bit towards discretionary spend.
04:23 And now we've got a good balance between, you know, sticky multi-year spend as well
04:27 as discretionary.
04:28 So but the overall sentiment is still much more on the cost takeout, you know, continues
04:33 to be in the cost takeout world.
04:35 And again, you know, our track record there has been good.
04:38 So we know we as I said, the winning track record is good as exemplified by our order
04:43 intake and the balance that we have between, you know, dependence on discretionary and
04:48 multi-year is also much better than it was last year.
04:51 All right.
04:52 You know, another question on everyone's mind is about the CEO's term nearing its expiry
04:59 in late 2025.
05:00 You know, if you could have any comments on, you know, the extension or any plans of succession,
05:08 can you give us some sort of an idea around here?
05:10 Yeah, DC is a very inspiring leader.
05:14 He has led us through the merger process.
05:17 And you know, it is, you know, I work very closely with him.
05:20 So these are board matters, you know, and the L&G board always takes decisions in the
05:25 long term interest of the companies and the shareholders.
05:29 So, you know, they will make sure that they, you know, that that is a board decision that,
05:34 you know, the LTI Mindtree board, I should say, will take.
05:39 And you know, as I said, for us, succession planning is just a usual part of every company's,
05:46 you know, endeavors as they look to talent.
05:49 So there is, I would say there is absolutely nothing to read into that.
05:53 What we are focused on as a leadership team, DC, Nachiket and me, is ensuring that we come
05:58 back to the growth rates that we used to have.
06:02 And that, you know, and that's really going to come through conversion of the deal pipeline.
06:06 So, you know, huge focus really on execution.
06:09 We talked about this yesterday as well, when we made our remarks that, you know, we'll
06:14 focus on execution on all fronts, especially on the revenue front.
06:18 So the final question then, what are the factors that you're watching out for that could potentially
06:23 lead to a meaningful improvement in the business performance for the entire industry as a whole
06:30 as we move into new year?
06:31 I know you're not going to be talking about the economy, but, you know, there's all sorts
06:36 of questions about rate cuts being pushed by another year in the US.
06:41 Of course, we do have a lot of other, you know, economic challenges in not just US,
06:46 but the European economies as well.
06:48 My question really is a little bit more broad based about the factors that you'd want to
06:52 watch out for, which would perhaps indicate a genuine improvement in the environment going
06:57 forward.
06:58 Yeah, I think, you know, the macro is uncertain and it will continue to be so, especially
07:04 the geopolitical tensions.
07:06 It's also an election year in multiple countries, actually, not just in the US and India, but
07:12 there are several other countries where it is.
07:13 I think what we have assumed that, you know, this year, as I said, from an overall economy
07:19 perspective will be similar to last year in terms of it's and what we've learned, you
07:24 know, the essentially the things that we've learned in the previous year, you know, the
07:27 best practices, I think we are much better positioned to navigate the year.
07:31 So frankly, we're looking internally, we're looking, you know, we we're not going to use
07:36 the economy as an excuse.
07:37 We are going to work internally on all the levers that we have to drive growth.
07:41 We've got a very impressive, you know, client roster.
07:45 And I personally am looking at our Focus 100 accounts as well in depth.
07:49 You know, DC is driving a program for growth, profitable growth across the company himself.
07:55 So our endeavors are really to focus on all the internal levers that we have, you know,
08:00 the cross sell upsell kind of potential that we have.
08:03 Those are the things that we are focused on.
08:05 And you know, we're, you know, this, as I said, even in the existing economic conditions,
08:11 our endeavor would be to come back to, you know, the growth that we used to have or that
08:16 we aspire to have going forward in FY25.
08:19 [Music]