CRISIL said that the ratings continue to reflect the enhanced market position of the company in the Indian information technology (IT) services industry after merger of the two erstwhile Larsen & Toubro entities: L&T Infotech (LTI) and Mindtree effective 14 November 2022.

The combined entity has enhanced scale, diversified technical capabilities, and product offerings with presence across end-user industries, geographies, and customers. LTIM continues to exhibit a strong financial risk profile stemming from nominal reliance on debt (Rs. 125 crore of financial bank debt and Rs. 1,415 crore of lease liabilities as of March 2023), healthy cash-generating ability and robust liquidity.

Furthermore, the company benefits from the expected support of its parent and the strength of the L&T brand. These strengths are partially offset by customer and geographical concentration in revenue, and exposure to intense competition in the IT services industry in India.

The ratings also continue to reflect the expected sustenance of strong business performance, supported by a healthy deal pipeline, and diversified service offerings across multiple verticals.

Revenue is expected to grow in double-digits over the medium term with continued healthy deal wins despite macro-economic headwinds, due to improved cross-sell, up-sell, mining of existing large clients across end-user industries and better ability to bid for large deals.

The ratings also reflect the strategic focus of the parent, L&T, on the service business, contribution of which has been improving over the years both in terms of revenue and profitability. The parent has also been leveraging the capabilities of the services segment to augment its core business.

LTIMindtree provides IT services, including application, development, maintenance, enterprise solutions, infrastructure management services, testing, analytics, AI, and cognitive and other services.

The company reported 11.3% growth in net profit to Rs 1,114.1 crore on a 0.8% increase in revenue to Rs 8,691 crore in Q4 FY23 over Q3 FY23.

The scrip rose 0.10% to currently trade at Rs 5002.65 on the BSE.