“Our US business grew by 1 per cent, our European business declined by 1 per cent in this quarter, mainly driven by cross-currency impact. Customers in the 11 to 20 buckets grew faster than Mindtree and achieved 3.6 per cent growth sequentially,” said Mindtree Chief Executive Officer Rostow Ravanan during the analyst call. Lower IT revenues and higher billing days further affected the rate realisation despite higher deal total contract value reported during the quarter.
Of course, Mindtree had a volatile quarter from a management perspective as well due to the L&T acquisition but Ravanan noted even some of their peer group commentary indicated there were some ups and downs in banking, financial services, and insurance (BFSI) currently.
Similarly, one of the most-favoured mid-caps of FY19, Cyient, reported revenue decline in two key clients across aerospace and defence and communication, leading to a sharp revenue decline of 5.2 per cent QoQ. “But the drop in top five clients was a mere $2 million QoQ (top 6-10 was flat QoQ) and the sharpest decline was in non-top 10 clients that was down $6.6 million QoQ, a dip of 8.7 per cent QoQ,” said Ravi Menon, research analyst, Elara Capital.
Larsen & Toubro Infotech (LTI), another strong player in the mid-cap space, reported Ebit margin at 16 per cent, a drop of 170bps QoQ, owing to rupee appreciation, investments in sales, and visa cost. In Q2FY20, the company’s margins are expected to take a hit of 170bps, owing to salary increase.
LTI confirmed the worst was over for the company, with regards to decline in revenues from top clients though it expects decline in revenue from one top-10 client in the BFS vertical in Q2FY20.
On the bright side, the companies
are confident about their acquisitions and have indicated more inorganic growth in pipeline to support revenue growth.