Key takeaways of the call

The company, over the past five years, has delivered USD revenue CAGRof 13.5 % and more than doubled its net profit.

During these years, the company has built a new brand identity, strongest teams and has built strong capabilities and partnerships.

The company has vaccinated more than 14500 employees and their families through vaccination.

Revenues for the quarter stood at Rs 3462.5 crore, a growth of 5.9% QoQ and 17.4% YoY. Growth was driven by holistic growth across its verticals, service lines, client pyramid and geographies. Q1 was the best ever quarter for the company.

EBIT for the quarter was Rs 568.2 crore, translating to OPM of 16.4% as compared to 19.3% in Q4FY2021. OPM was lower due to negative impact of wage hike by 340 bps, loss of 120 bps due to provisions and write backs, loss of 60 bps due to investment in business developments. This was offset by gain of 140 bps due to productivity improvement, gain of 80 bps due to forex gain.

S,G&A stood at 12% of the revenue as guided in the past.

Reported PAT was at Rs 496.8 crore translating into 14.3% margin when compared to 16.7% in Q4FY2021.

The company's PAT margin will be in the narrow range of 14-15% for FY2022.

On people front utilization excluding trainees stood at 84.1% and with trainees stood at 83.7% for the quarter.

The company's largest vertical BFS has grown by 39.4% YoY, Hitech, media and entertainment and others also grew by more than 30.0% YoY. Also, insurance and energy and utilities is also growing which was little soft in the past.

BFS grew 9.6% QOQ. This was driven by its existing customers as well large deal win last quarter. Insurance 5.3% growth in QoQ this was largely due to recently added logos ramp up, large deals announced last quarter and from existing clients. The company is positive traction on its refined insurance strategy. Manufacturing declined 6.6% QoQ, this was mainly due to the company had pass through revenues in Q4FY2021. Pass through revenues is also reflecting in enterprise solutions and India revenues. Energy and utility grew by 4.7% largely driven by utility space. High-tech media and entertainment grew 13.1% due to large deal win in previous quarter.

On service line front cloud infrastructure and service grew by 32% YoY. Rest of service clients are also growing in double digits on a YoY basis.

The company added 23 new logos during the quarter. Strong growth is contributed by top 5, 6 to 10, 11-20 client buckets.

The company has added 1 client to the USD 50+ million and 3 each in USD 10 and USD 5 million category during the quarter.

Demand: During the pandemic the company has seen digital adoption pick up strongly. The company has seen a secular demand among its client around their digitisation efforts, across 400+ customers. The company has not seen such an opportunity in the last 10 years. Nature of demand and expectation around execution is also changing.

The company sees discretionary spend increasing with demand for projects to be executed on offshore based agile parts, shorter deal cycles. Wants a small agile team of 4- 8 members this includes single task, scope, or requirement.

Works which were mostly executed onsite before the pandemic are now mostly executed offshore.

Outlook: After having a double-digit growth in FY2021, the company had a strong start in FY2022. Pipeline being healthy, good conversion, the company expects healthy growth in FY2022.

The company is looking at hiring 4500 freshers for the year which is higher than what the company had hired in any year in the past. The company added 2000 people in Q4FY2021 and 2300 in Q1FY2022. The company focused on building and scaling differentiated capabilities to fulfil the accelerated demand. The total manpower stood at 38298 of which production associates were at 95.1%.

Attrition for the quarter stood at 15.2% v/s 12.3% in last quarter on LTA basis.

Billed DSO improved by 1 day and stood at 60 days. DSO including unbilled revenue was at 98 days increasing by 4 days QoQ.

Tax rate stood at 26.1% for the quarter.

The company is committed to become carbon neutral for its India operations by 2030.

For data products business, the company will have a separate sales team. It will go independently to the market and pipeline will be built independently. The team will have synergy from existing customers and the company is seeing good traction.

Acquisition:

The company completed acquisition of Cuelogic Technologies, a digital engineering and outsourced product development company. Cuelogic primarily focuses on developing cloud native web and mobile applications, modernisation, and runs Innovation Lab as a service for its clients in the US and India.

Cuelogicisis the seventh acquisition by the company since it got listed in 2016.

Dividend:

The Board of Directors at its meeting held on July 15th, 2021 have declared a special dividend of INR 10 per equity share (Face value of INR 1) to commemorate the completion of 5 years of listing on the stock exchanges in India.

Other highlights:

The company has been recognized as the Global Innovation Partner of the Year by Snowflake, the Data Cloud Company.

The company's Syncordis has been recognized as Temenos Service Partner of the Year.

Management Comment:

Commenting on the performance Mr Sanjay Jalona-CEO & MDsais "We are pleased to report our best ever Q1 sequential growth of 5.1% driven by holistic growth across our verticals, service lines, client pyramid and geographies. Our healthy pipeline and continued strong demand makes us confident of our future growth.

Q1 also marks the 5- year anniversary of LTI's IPO and our Board has declared a special dividend to of commemorate this occasion. Over these past 5 years, we have delivered USD revenue CAGR of 13.5% and more than doubled our net profit. I am proud of how we continue to innovate and deliver year on year industry leading growth. I am also excited as we strengthen our digital engineering capabilities welcoming Cuelogic Technologies."