India’s LTIMindtree delivered a mixed set of third-quarter results, with profit taking a hit from sweeping labor law changes even as revenue growth and record order bookings underscored the underlying strength of demand for IT services.
The country’s sixth-largest IT services firm said net profit fell 8.3% to 9.71 billion rupees ($106.76 million) in the three months ended December 31, dragged down by a one-off charge of about 5.9 billion rupees linked to India’s newly enacted labor codes.
Implemented in November, the reforms mark the most significant overhaul of workers’ laws in decades and have forced companies to reassess provisions tied to employee benefits, social security contributions, and long-term compliance costs.
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For India’s IT industry, which is heavily dependent on large workforces, the impact has been immediate. LTIMindtree joins peers such as Wipro, Tata Consultancy Services, and HCLTech in flagging profit pressure from the new rules, reinforcing expectations that margins across the sector could remain volatile in the near term as firms absorb the regulatory shock.
Yet beyond the headline profit decline, the numbers point to a company still gaining traction in a competitive and uncertain global environment. LTIMindtree’s revenue rose 11.6% to 107.81 billion rupees, broadly in line with market expectations, reflecting continued client spending despite tighter technology budgets in some regions. More telling was its order book: total deal wins touched a record $1.69 billion, slightly above the year-ago level. That figure was bolstered by a $580 million contract secured in October, the largest deal in the company’s history, highlighting its growing ability to compete for large, multi-year mandates.
Analysts say this contrast between short-term earnings pressure and longer-term growth visibility captures the broader state of India’s IT sector.
“The numbers look good in terms of margins, revenue and hiring as well,” said Karan Uppal, lead analyst at Phillip Capital.
He noted that LTIMindtree has offset weakness among its top five clients by expanding business across other accounts, reducing concentration risk at a time when some large global clients are slowing spending.
Performance across business segments was uneven. The banking, financial services, and insurance (BFSI) unit, which accounts for about one-third of overall revenue, grew 2.3%, reflecting caution among financial institutions grappling with higher interest rates and regulatory scrutiny in key markets. In contrast, the consumer segment posted a 14.6% rise, the fastest growth among the company’s five verticals, suggesting relatively stronger demand for digital, data, and customer-experience projects from consumer-facing clients.
The broader demand outlook offers some support. Larger rival Infosys recently pointed to healthy deal pipelines, particularly in financial services, easing fears of a sharp downturn in IT spending. For LTIMindtree, the combination of rising revenue, record bookings, and large deal wins suggests momentum could carry into the coming quarters, even if profitability remains clouded by regulatory adjustments.
Taken together, the results illustrate a sector navigating multiple crosscurrents. Structural reforms at home are increasing costs and weighing on near-term profits, while global macro uncertainty continues to influence client behavior. At the same time, steady revenue growth and strong order inflows indicate that demand for Indian IT services remains intact.
The task ahead for LTIMindtree will be to convert its expanding deal pipeline into sustainable earnings growth once the one-off impact of labor reforms works its way through the system.