Bengaluru-based mid-tier information technology (IT) services firm Mindtree has reported 6.6% revenue growth year-on-year for the last quarter of the financial year ending March 2020.
For the full fiscal, the company reported a topline growth of 8.7%, even as it closed the year with $1.2 billion in deal wins during the period.
Debashis Chatterjee, CEO of the Larsen and Toubro (L&T) group-owned company, said the company anticipates softness in demand during the first quarter of the current fiscal. However, he did not comment on the quantum of the expected revenue loss for the quarter or for the full year, citing lack of visibility on when the Covid-19 situation will return to normal.
“We are observing the situation, which is still evolving. We have deferred increments while freezing hiring as there is a need for a clear picture... Customers are deferring technology spends,” Chatterjee said. The company has been on a cost-efficiency drive over the past few quarters, which has helped it expand margins, he said.
Mindtree reported a revenue of $278.4 million during Q4 -- a sequential growth of 1.2%. The company reported net profit of $28.2 million during the same period, which is a growth of 1.8% over the preceding quarter of the same year.
It reported $1.1 billion in revenue for the full fiscal -- a growth of 8.7% over the previous financial year. However, its net profit stood at $488.5 million, which is a decline of 17% over the preceding fiscal.
Initiatives to cut the declining profitability included lowered travel costs, subcontracting cost as well as other operational costs, Chatterjee said. Mindtree expanded its operating margin by 1.5% during the last quarter, with the highest ever deal win being a little under $400 million, indicating that the margin expansion was not at the cost of topline and vice versa.
Mindtree said that it has been rationalising its client base while increasing the ratio of top clients to its topline. The company had 307 active clients at the end of March.
Chatterjee said that Mindtree had moved almost its entire staff to work from home (WFH). Its robust business continuity plan and the WFH culture had helped the company increase productivity during the quarter, it said.
“Our top clients continue to grow and we see good traction. These customers are leveraging digital and will invest more in these technologies, which is our strength. We expect to grow it further as they look at avenues to bounce back faster, we see more opportunities. Nothing is getting cancelled and as clarity emerges, things will improve,” Chatterjee said.
Last year, Mindtree was acquired by L&T in a hostile takeover, when its largest shareholder sold stakes to the multi-billion conglomerate. The event saw founder-promoters leaving the company in four-five months, followed by a top management churn.
In light of the Covid-19 pandemic, most top-tier IT companies have suspended guidance, while foreign peers have withdrawn their guidance for 2020. While the top companies are optimistic about the situation returning to normal by Q3, analysts expect the current year to be a washout.