BENGALURU: Mindtree and Larsen & Toubro Infotech (LTI) in May announced a mega-merger that will create a scaled-up IT services provider exceeding $3.5 billion. The stock exchanges already have provided their observation letter and no objection, and the merger is now awaiting other regulatory approvals.
There is a steering committee that meets regularly to oversee the integration plan. “We recently won a large deal with a Europe-based global travel technology company in partnership with LTI to provide end-to-end development and support services for the company’s customer services applications,” Venu Lambu, executive director and president, global markets at Mindtree, told The New Indian Express.
The merged entity LTIMindtree will combine the complementary strengths of both companies and this will boost the ability of the two companies to participate in large deals and strengthen partnerships with ecosystem players. Lambu said synergies between the two companies are already producing results.
The company reported Rs 3,121.1 crore revenue, a 36% increase in the first quarter of FY23 compared to Rs 2,291.7 crore in the year-ago period. It also saw the highest-ever order book of $570 million. Mindtree delivered its sixth consecutive quarter of over 5% revenue growth. When asked about the tech demand environment, Lambu said there are no indications yet of any significant change in client behaviour.
“Organisations across sectors are today convinced that digital transformation is indispensable in creating long-term competitive advantage. They are looking at the digital transformation to improve revenues as well as optimise costs, more so through macroeconomic shifts of the kind we are witnessing now,” he added.
Cross-currency headwind
Though Mindtree’s retail, CPG and manufacturing business grew 15.6% YoY, it was 8.7% down sequentially. Lambu said the sequential decrease was because of client-specific issues and a significant cross-currency headwind. He called it pockets of softness in certain areas depending on what specific clients retail and their supply chain dependencies involving China or Russia.
“The good news is that these clients will soon have to start getting ready to support the next peak festive season marked by the highest sales and profits. That should help navigate and mitigate some of the headwinds of softness in certain areas of the sector,” he said.
In Q1 FY23, it's banking, financial services and insurance business grew 6.5% sequentially and 31.7% Y-o-Y. The firm’s youngest industry group, Health, continued its strong growth trajectory, with a 43.5% sequential and 170.4% Y-o-Y growth. Earlier in the quarter, Mindtree made a strategic investment in COPE Health Solutions, a leading US healthcare consulting and implementation, to expand its healthcare business.
“We are seeing good client traction with that investment in the areas of value-based care, clinical workforce management, and population health management. It is helping us play at the intersection of health and technology,” he said. The company has been making investments in metaverse solutions and capabilities.
“Clients across verticals are evincing interest in the metaverse and working with us to determine the right use cases as well as the potential value,” he said. Mindtree is taking two approaches in this space. One is to build a custom metaverse and implement use cases for better customer or employee engagement. The other is to create a virtual presence in established third-party metaverses.