LTIMindtree shares dip 13% despite robust Q3; here's why

Shares of LTIMindtree declined as much as 13.4% to hit an intraday low of ₹5,436 apiece on the BSE in early trade on Thursday, weighed down by lower-than-expected December quarter earnings as well as weak management commentary. The L&T group company reported a decline in its operating/EBIT margin of 15.4% in the December quarter of FY24, down 60 basis points from 16% in the September quarter. This is the second consecutive quarter where the company's EBIT (earnings before interest and tax) margin was below its margin guidance of 17-18% for FY24. The company has, however, kept the margin guidance unchanged for FY24.

"The key moving parts for the margin decline are 200 basis points, moving to higher furloughs, lower working base and seasonal pass-through revenue," the company says in a post-earnings call.

Following this, the scrip opened lower at ₹5,808.55, down 7.47%, as against the previous closing price of ₹6,277.65. At 9:55 am, the company's share price was trading 12.12% lower at ₹5,516.65. This was in line with the broader BSE Sensex which was trading 753.46 points or 1.04% lower at 70,757.

In the first hour of the trading session, the company’s market capitalisation stood at ₹1,62,282.72 crore, with 33,570 shares exchanging hands on the BSE as against the two-week average of 0.21 lakh shares. The company hit a 52-week high of ₹6,442.65  on January 15 this year and a 52-week low of ₹4,120 on January 23 last year.

In the past three months and one year, the counter has given 7.48% and 15.99% in returns, respectively.

For October to December period of FY24, LTIMindtree, the country’s sixth largest information technology (IT) services provider reported a 16.8% increase in its consolidated net profit as against ₹1,000.7 crore in the corresponding period of the previous year. During the quarter under review, the company’s revenue from operations stood at ₹9,016.6 crore, witnessing a growth of 4.6%, as against ₹8,620 crore in the same period last year.

In the December quarter, the company’s EBITDA (earnings before interest, tax, depreciation and amortisation) stood at ₹1,584.9 crore, witnessing a growth of 15.3% as against ₹1,374.8 crore in the same period last year. The company’s EBITDA margin stood at 17.6% as against 16% in the same period last year. The company’s net profit margin stood at 13% as against 11.6% in the same period last year. The company’s gross margin stood at 29.9% as against ₹28.6% in the same period last year.

Sequentially, the company's profit remained largely flat by 0.6% in Q3 as against ₹1,162.3 crore in the September quarter. The company’s revenue also witnessed a margin growth sequentially by 1.2% as against ₹8,905.4 crore. The company’s EBITDA, however, declined by 2.8% sequentially, as against ₹1,631.3 crore in the same period last year.

During the quarter under review, the company’s employee count stood at 82,471, with an improved attrition rate of 14.2%. In the September quarter of FY24, the company’s attrition rate stood at 15.2%.