Q2 21/22

Oct 18, 2021

gentlemen, good day and welcome to LTI Q2 FY 2022 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Sunila Martis, Head, Investor Relations, LTI. Thank you. And over to you, Ms. Martis. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you, Faizan. Hello, everyone, and thank you all for joining us today to discuss LTI's Q2 FY 'twenty two earnings. The financial statements, press release and quarterly fact sheet are all available in our filings with the stock exchanges and on the Investors section of our website. On the call today, we have with us Mr. Sanjay Jalona, CEO and Managing Director Mr. Sudhir Chaturvedi, President, Sales Mr. Nachiket Deshpande, Chief Operating Officer and Anil Randhar, Chief Financial Officer. Sanjay and Anil will give you a brief overview of the company's performance, which will be followed by the usual Q and A session. As a policy, LTI does not provide specific revenue or earnings guidance and anything said on the call, which reflects our outlook for the future or which can be construed as a forward looking statement, must be reviewed in conjunction with the risks that the company faces. Let me now invite Sanjay to talk about the results. Over to you, Sanjay. Thank you, Sunila. Hello, folks. I hope all of you are doing well. I'm frankly very excited to be here in Mumbai, and I'm joined by Sudhir, Nachiket and Anil, all in the same room after a long time. Actually, traffic is crazy like pre COVID, but I truly love it. We have all been through a lot in the last 19 months and despite all the challenges, we have fulfilled our promises to our clients. I want to thank all the LTIs for their grit and determination. During this time, we have also onboarded record number of new employees. Across the globe, our leadership team is now back in office and frankly, it feels great to be back traveling and meeting people again. We have planned a gradual and calibrated approach towards a hybrid model of return to office. Our future of work model called Yin Yang embraces the duality of operating from office and home effectively. We are already seeing encouraging results based on the voluntary rollout of the model. Our employees appreciate the flexibility and many are excited to meet their colleagues for the first time or meet their teams after a long time. Our model focuses on ensuring seamless project governance, consistent productivity and better employee engagement. We would be completing the rollout of this model across most of our customers by end of this year. Moving to our results, we recorded our best ever sequential growth performance of 8.9% in constant currency. In reported numbers, this translates to 8.3% quarter on quarter and 25.8% growth on a year on year basis. With revenues of $509,000,000 our quarterly annualized revenue crossed the $2,000,000,000 mark. We crossed our first $1,000,000,000 in FY 2018 and we have had great fun over the last 4 years as we added another $1,000,000,000 to our top line. Our quarterly growth is holistic across verticals, service lines, client buckets and geographies. I want to call out some highlights for the quarter. Our largest vertical BFS grew 36.8% year on year and high-tech and media and entertainment grew by 48.5%, while the others, which include some of our marquee clients and services sector grew 38.5%, 4% year on year basis. All our service lines grew at or above 20% Y on Y with solid 40% plus year on year growth in analytics, AI and cognitive and enterprise integration and mobility service lines. We added 25 new logos during the quarter. We opened a new logo in Europe with a TCV of $30,000,000 for a 5 year deal. The other hallmark of our solid Q2 was the consistent upward movement across client buckets. We added 1 client in $50,000,000 $3 in 20,000,000 dollars 5 each in $10,000,000 and 5,000,000 buckets as well. Folks, the superior performance that you see is due to broad based demand that we are seeing in the market. Let me talk a little bit about what I mean by broad based demand and why do I think this trend is likely to sustain in the coming years. There are 3 key drivers of this secular growth. Firstly, clients today are working on new business models and want partners who can co create with them and deliver at speed. This demand is coming primarily from discretionary spends on projects that are driving business transformation. The transformation of this happens of this scale happens once in a century. We call it the great restructuring. The great restructuring is comprehensive and every enterprise must adapt or see this position. For example, I was talking to an automotive client. Today, they must think of not only new cars, new technologies, new factories, but also new ecosystem partners like battery manufacturers, supporting infrastructure, new sales and marketing and services distribution channels as well. This is required because OEMs need to reimagine the supply chain and channels to offset the high cost of batteries that make EV automobiles expensive. This means either building a new technology stack or revamping your existing stack. Similar transformations are happening across all industries. Clients no longer call these parts of business transformation spends as programs, but these are journeys that they have embarked on to fight and win in the new normal. These journeys comprise of multiple small sized projects that are continuous in nature and we are very proud to be part of several such transformation journeys. The second key driver is the new spend areas. Changing customer expectations on all new technologies are no longer the only variable driving demand, but we are seeing emergence of new areas of spend. For example, ESG has started playing a key role in business decisions and strategy. Cloud security is also seeing a lot of new opportunities. In these and many more emerging segments, we have barely scratched the surface and there is a long runway for growth. The 3rd driver, let's touch upon that. While we have been focused on the demand side drivers, there is a fundamental shift that we are experiencing on the supply side as well. It is not only tech companies hiring the tech talent, but companies across sectors, including NGOs are tapping the same talent pool. There are 10,500,000 jobs opening in the U. S, but only 7,700,000 unemployed people. That data represents the ongoing trends of employees voluntary leaving their jobs post COVID. The pandemic gave workers more free time to think about their carriers, explore entrepreneurship and save more money, leading many to realize their current jobs were not fulfilling. Management professor Anthony Klotz call terms this as a great recession, and he believes the rise of hybrid and remote work has caused the phenomenon. There is sharp increase in wages, severe talent crunch globally and increase in attrition across industries. This is the first time our clients are witnessing the shortage and attrition of this magnitude that we have always faced in our industry. This is creating opportunities for scale up for IT services and also leading clients to turn to tech solutions like automation to solve for supply side constraints, which again create future opportunities. These three factors are creating sustained demand in the marketplace. Now let me address how do we benefit from this secular growth in demand. Clients really appreciated our exemplary support to them during COVID and is reflected in our SLA performance in CSET scores. This is seen by clients as a strong testimony to our execution excellence. Secondly, we are focused on changing the nature of conversations with our clients. To have future centric conversations with clients, we have further enabled and invested in capabilities and talent in our select focus verticals to have people with the right domain knowledge, capabilities and execution excellence. We invested ahead of time to develop capabilities in cloud, data, infosec and augmented our strengths in core transformations. These capabilities have developed were developed through a mix of in house innovations, target acquisitions, including our recent acquisition of QLogic and partnership with the ecosystem players like hyperscalers and companies like Snowflake. In our net shell, we have the right ingredients in place to deliver on our core purpose of let's solve and deliver amplified outcomes to our customers. Let me now shift gears from the demand side on how we are managing our talent supply. On a net basis, we added around 2,000 people in Q1 in Q4 sorry, Q4 of 2021, 2,300 in Q1 of this year. In Q2, our net hires are at 4,000 plus. To support the robust demand that see, we will be increasing our pressure intake in India to 5,500 for FY 2022 as well. The industry is facing a sharp increase in attrition. Most of the attrition is in the 3 to 6 years experience bracket. IT services sector did not recruit enough pressures over the last 3 to 4 years given the prevailing demand scenarios and uncertainties due to COVID. Industry and academia would need to come together to create talent pool, but it would take some time. In addition to increasing pressure hiring for the year, we'll hire 1,000 people in 1 to 2 years experience bracket and build on their skills in niche areas like cloud, data and digital through the various academies we have set up. 2nd, upscale and cross skill the existing workforce. And lastly, we're also thinking of alternate non tech stream talent to be trained and be kept ready for times to come. Let me now provide you with the color of performance for our verticals. BFS continues its strong near double digit growth of 9.6% quarter on quarter. We see spend shift from operational and then the bank projects to modernization. This vertical has seen holistic growth during the quarter across the geos. Moving to insurance, this vertical has been a laggard for us over past several quarters, but is now seeing some pickup in growth since Q1. We saw 5.6% quarter on quarter growth here, While we have seen positive momentum with our new leadership driving opportunities, there still remains a lot to be done here. Manufacturing sees double digit growth of 12.4 percent quarter on quarter. We have a strong pipeline here as we see demand in industrial, manufacturing and capital goods sector with companies continuing to add digital solutions and embracing ways of working. Energy and utility grew 6.3% quarter on quarter. Over the past few quarters, we have seen we have been sharing our expectations on how spends in oil and gas space have been volatile. While the energy continues to be choppy, we see good traction in utilities. CPG Retail and Pharma grew by 1.9% quarter on quarter. Growth in this vertical will be driven by spends on data related projects as wholesaler and retailers adjust to new realities to meet customer expectations with curbside pickups and direct to consumer outreach. Iteng and Media grew by 6.9 percent quarter on quarter and had a strong year on year growth at 48.5. Others will largely include which largely include professional services, government in their ministries and other global enterprises and public service registered 14.2% growth quarter on quarter. Now before I close and I wanted before I talk about outlook, let me recap that we had nearly double digit growth in FY 2021 despite COVID. We have seen a solid H1, strong new logo additions and a robust pipeline. For FY 2022, we are comfortably placed across the milestone of $2,000,000,000 in revenues, giving us confidence to deliver on our FY 2022 guidance of being in the leaders' quadrant for growth with stable PAP margin and 14% to 15% band. With that, let me hand it over to Anil. Thank you, Sanjay. Hello, everyone. It is great to be back with you all with another quarterly earnings and I wish you a safe and healthy day ahead. Let me take you through the financial highlights for the Q2 of financial year 2022, starting with the revenue numbers. In the Q2 FY 2022, our revenues stood at US509 million dollars up 8.3% sequentially and 25.8% year on year basis. The corresponding constant currency growth was 8.9% quarter on quarter and 25.5 percent year on year. Reported INR revenue of $37,670,000 was up 8.8% quarter on quarter and 25.6% year on year. Now coming to profitability, EBIT for the quarter was INR6482 million translating into an operating margin of 17.2% as compared with 16.4% in the previous quarter. The margin walk is as follows: 70 basis points of SG and A leverage was offset by 70 basis margin drop due to utilization. Tailwinds from effort mix and higher working days were partially offset by higher employee costs. Reported profit after tax was INR 5,517,000,000 this quarter, which translated into a PAT margin of 14.6% compared with 14.3% in Q1. We remain comfortable with our guided margin by 14% to 15% for FY 2022. In employee metrics, moving to people front, utilization without trainees was at 83.7% as compared to 84.1% last quarter and utilization including trainees was at 81.6% versus 83.7% in Q1. We continue to strengthen our workforce and during Q2, we added 4084 people for a net business. The total manpower stood at 42,382, of which our production associates were at 95.3%. In this quarter, attrition is 19.6% versus 15.2% last quarter on an NTM basis. On ForEx and hedge book, our cash flow hedge book stood at $1586,000,000 as of 30th September 2021 versus $1403,000,000 as of 30th June 2021. While the all balance sheet hedges 2 lakh $88,000,000 versus $77,000,000 last quarter. Moving on to DSO, In Q2, the build DSO stood at 61 days compared to 60 days in the last quarter. The DSO including unbilled was at 98 days unchanged quarter on quarter. For the quarter, the net cash flow from operation was at INR 5,041,000,000 which was at 91.3 percent conversion of the net income. At the end of the quarter, cash and liquid investments stood at INR38403 million as compared to INR43,314 million last quarter. The effective tax rate for the quarter was 25.6%. The Board of Directors at the meeting held earlier today have declared an interim dividend of INR 15 per equity share. Earnings per share for the quarter stood at INR 31.5 as compared to INR 28.4 in Q1. Diluted earnings per share was INR 31.4 versus INR 28.3 last quarter. Before I end my presentation, I wanted to highlight that we have published our 5th sustainability report for FY 2021 during the quarter. This year's report details LTI's approach of solving responsibility all through the pandemic. This approach enabled us not only limit the extent of disruption in our operations, but also support the communities we operate in. With that, I would like to open the floor for questions. Thank you very much. We will now begin the question and answer The first question is from the line of Sandeep Agarwal from Edelweiss. Please go ahead. Sandeep, your line is very unclear, man. Can you hear me now, please? Yes, yes, yes. I have a very bad, so I'm still trying again and again. Okay. Yes, speak. Mr. Agarwal, we are not able to hear you, sir. I request you to please rejoin the question queue. Thank you. The next question is from the line of Vibhor Singhal from Philip Capital. Please go ahead. Yes. Good evening, sir. Thanks for taking my question and congrats on a great set of performance once again. Just a couple of questions from my side, sir. So one is on the manufacturing side. Just wanted to pick your brains, What is the kind of growth that we are seeing in this kind of verticals? Is it led by, let's say, some revival in the auto segment or some other division? And how sustainable and how strong growth momentum do you perceive this to be in the next couple of quarters? And second question from my side is on the European geography. Basically, Europe seems to be slightly softer than, let's say, how the U. S. Market is shaping up. Of course, on a Y on Y basis, it's quite strong. But therefore, that's, of course, we saw a sharp fall there as well. So how do you see the gain from momentum, especially from that geography? And any color on which vertical is the growth momentum stronger in Europe would be really helpful? Sudhir, can I request you to answer that? Thanks, Vibhor. So on manufacturing, actually, we are seeing growth across all sectors. So auto, especially industrial manufacturing, as you can imagine, what is happening in both all of the manufacturing sectors is 2 key trends. 1 is or in fact, 3 key trends. 1 is core digitization. So we are seeing significant traction in the ERP economy as people look to digitize the core. The second is in the data side of the house, there is significant work happening as manufacturing clients look to leverage the data that traditionally exists today in ERP system now being leveraged across all parts of their enterprise for real time decision making. And the third is all the combinations of the business model change, right? So whether it's direct to customer. So for example, manufacturing clients investing in warehouse management in a very significant way to in order to deliver products direct to customer, right, or investing in e commerce capabilities or investing in real time supply chain. So that's why we are seeing broad based growth in manufacturing across. Now coming to Europe. So Europe grew for us 25.7 percent on a year on year basis. So that's in fact the strongest growth that we've seen in a while in the region. So I know you're probably comparing the Q o Q number, which is 5.1%, but I think there are good portends to Europe. Remember, we had a bit of constant currency on constant currency basis, the European growth would have been a bit higher. But we see good traction in Europe. And in fact, Sanjay announced we also had a large deal win in Europe. So I think we'll continue to see that. And in Europe, the main traction is more in, let's say, retail and other B2C segments? Or is it across B2B as well? Across all verticals. BFS plus other verticals, yes. Across verticals, yes, that's correct. Broad based. Got it. If I could just squeeze in one more question, Sanjay. Just wanted to get an idea on the supply side challenges that we're facing. I think it's just not us, I think, the entire industry is facing that right now. The attrition has picked up for everybody across the board and we're hearing, of course, the very strong salary hikes and the challenges that we're facing. So given the steps that you have taken in terms of more pressure hiring, hiring of 1 to 3 years bracket kind of people that you're looking at, how longer do you believe this lead time will sustain? Could this be a 2 to 4 quarter phenomenon? Or do you believe the supply or the reskilling of these involves is going to take longer time? When could we see maybe let's say the attrition coming back to those earlier normalized rate or the supply side challenges probably being much at least slightly lower than what they are today? Vibhu, I wish I could answer this question as clearly as you have asked it. I don't think if I were to reflect back few quarters back, we would have assumed that the demand will be as high, right? And it's just a matter of demand versus supply. In absence of the demand, we never actually even thought in the same vein that we would be hiring 4,000 net people, which with attrition spiking up the way it has done. See, in the absence of talent not being there because the industry did not hire, the academia did not create the talent, we had to do with what we could do best, which is to improve on our people supply chain, look at any alternate ways of finding talent, train the talent that we have in house and drive our productivity. That's what we have done. That is what we will keep doing. We do expect it will take some time. I suspect it will take at least 3 to 4 quarters for it to have some amount of stability. Got it. Thank you very much, Dave. Thanks for taking my questions. Wish you on the way. Thank you. The next question is from the line of Manik Dhanija from GM Financial. Please go ahead. Hi, thank you for the question. I had a couple of questions. Can you just add that Mr. Taneja, sorry to interrupt you. Your audio is breaking from your line, sir. Please check. Is it So your audio is still breaking? Yes. Is it better? Please go ahead. Yes. So Sanjay, basically I had a couple of questions. Is that while in the aftermath of COVID, we had acceptance and reliance on global delivery and that is evident both from an shift in effort mix as well as revenue mix. And this is true both for you as well as the industry. So do you think as travel becomes we see some normalization or reversal on this front? And the second question was around realization trends. Do you think that the demand environment provides the industry the ability to offset the increased cost of talent through higher pricing? Thank you. So the first question was, is your is our on-site ratios and offshore ratios will change? Is that the question, Manik? Yes, Sandeep. That's correct. I don't expect it to change given the three things that we talked about. The demand is very high. The attrition that we are used to, clients are facing it for the first time in double digit numbers. And frankly, they are looking up to their partners who have traditionally faced these kinds of attrition to actually help them scale and solve their problems and make them available in the marketplace, make them be competitive in the marketplace. So and in addition to that, with talent not being available, we need to automate a lot of tasks that pure labor is not available for. That is also creating opportunities for us. And I don't think in the short run, it will change at all. What was the second question? Second question was on the realization trends. Do you have Realization trends with high demand, right. So Manik, I think we are seeing increased rates in pockets. But I think we as we keep telling you, we you look at us as a growth company. This is once in a lifetime opportunity. We are looking at capturing as much growth and be the growth leaders and at the same time drive up productivity as well as the rate realization in times. But right now, we just focus to meet up the challenges that we see in front of ourselves on supply side and close the demand. We will we are seeing some increased rate realizations as well. Sure. Thank you and all the best for the future. Thank you, Nunek. Thank you. The next question is from the line of Sandeep Agrawal from Citi. Please go ahead. Yes. Hi. Good evening, Sanjay, and thanks for again giving me an opportunity. I think partly the problem of the lying issue is also to do with the telecom companies. But congrats on a great set of execution and you have been punching us analysts like Mike Tyson every quarter by beating the most aggressive estimates, but I love those punches and I am happy to take them as long as You guys don't believe us. That's the problem Sandeep. Start believing us. No, no. I am the biggest believer. You can check my notes of last 2 years and you will believe what I'm saying. But yes, I will ask only one question, Sanjay, and it is a very simple I will not ask you any difficult question. So you know much better than us in terms of where the industry is in terms of demand, margin and everything. So will it be fair to say that the worst of the margins is behind because the peak of attrition, I'm sure, is behind us because now a lot of talent which will start coming out of training, we will get them over a period of time. And we have given all the financial interventions, which are possible and which should be given. And on the other hand, demand continues to be strong. And particularly in your case, even the cloud business units and the hyperscaler business units, which you have initiated the process several quarters back is now almost complete, if I'm not wrong. Then will it be fair to say that for next at least 8 to 12 quarters, the growth the I would say the worst of the growth is behind and worst of the margins is behind. Will it be fair to quote? And I know you don't want to quote anything and give any guidance, but it will be very fair for you to at least guide the whole investor committee and the analyst committee in some sense where you see the industry is not at all for LTI specifically? See, where we are, we did not expect to hire as many people as we have hired. And frankly, at the same in the same vein, I don't think in 3 quarters back, I had the visibility to see that we would have such a strong growth environment as well. But we will continue to make more compromise and continue to invest for growth, whether it's in capability building, whether it's in the sales and marketing investments, whether it's in consulting capability, whether it's building on capabilities like we did in Snowflake case, where we caught that trend a little ahead and we invested then, went from there. As far I can't talk about the rest of the industry, but there's only one guidance that I gave, which is on the stable margin between 14% to 15%, at least in my watch right now, we are not looking at changing that at all. And on the revenue front, any direction you would like to give? Because on the margin, you have basically said no answer. Yes. So in the growth term, if I could find more people, Sandeep, if you have a way to produce more people, please let me know. We will have more people. Thanks a lot. Thanks a lot. And best of luck for the current quarter as well. Thank you, Sandeep. Thank you. The next question is from the line of Surab Govila from Morgan Stanley. Please go ahead. Yes. Hi. Thanks for the opportunity and congrats on a very good set of results. So I had a couple of questions. One is on the deal construct that is there in the market today. So historically, large deals are actually as one of the key drivers for the industry growth and for LTI as well. However, in the recent times, there has shift in terms of smaller size deals that have been closing, which are part of the larger engagements that you're witnessing. So in this context, how do we get a better handle on visibility on growth over the coming quarters? Is there some data point on the overall TCV, etcetera? Or would you say that the visibility over the year has become less than normal and less than usual? Silav, there are large deals. And we announced one deal. I hope and wish that we could have announced more, but there is enough pipeline and more will happen in times to come. Having said that, I want to be very clear, this is one of the best demand environments I have ever seen, right? And this is what I've been saying for the last 3, 4 months in a consistent basis. Look at our performance and numbers and look at the industry, right? For us, if you look at it, it's very broad based. It's across verticals, across service lines, across geographies, across line buckets. And this is what we articulated in my speech and I'll just summarize it. 1, there is demand because of great restructuring. Everyone needs to operate in the new normal and make changes because otherwise there's no winners or losers. If you don't do it, you will not exist, right? So that's there's a lot of requirements there. New spend areas like ESG, cybersecurity as well. Great resignation causing talent depletion at client side plus automation needs at the same time, which is causing more demands for us. And when you look at large deals, typically their large deals require consolidation, transitions, etcetera. Clients have so much to do and so much such high attrition, they have no time to think, right? So this is why we are seeing a lot of midsize deals, small size deals, lots of transformation and journeys and parts that we talked about in the marketplace. Whether large deals will happen or not, they will continue to happen at their pace. But right now, the important thing for our customers is to be competitive in the field that they play. And as far as we go, we believe that if we have the right people, capabilities and execution excellence, we continue to invest on that. Just like we navigated pandemic year with 9.5% growth, we are confident we can continue to grow in times to come. You have to have the heart to do it. Got it, Sanjay. That's very helpful. And another question I had is on the trends in the coming second half of the year. So usual trend is that we've seen 2 is stronger than 1 as you do seasonality. So would you say that trend will hold through this year as well or given that we have had very strong 1H? Yes. Okay, sure, Simple answer, right? Yes, yes. And then one last clarification on the pickup in attrition and the employees that we've added through the quarter. Would you say the impact of these on the costs that sort is already baked in or will flow through in the next quarter? Rajuget? Yes. So we continue adding, Sanjay mentioned in his speech as well, we added almost 2,000 in Q4, 2,300 in Q1 and another 4,000 in Q2. So we continue to add the same pace going forward in the quarters as well. So the cost impact of that is what is there in our P and L already. And that's why, as Sanjay said, we are confident to continue to maintain our margin guidance of 14% to 15% back. Thank you. The next question is from the line of Subir from ICICI Securities. Please go ahead. Hi. Good evening, everyone. Thanks for giving me the opportunity and congrats on a great set of numbers. Sanghino, my first question is if you look at the performance potential between the large sized companies and mid sized companies, right, in the recent past, it has the margin of out outperformance of mid sized companies has increased considerably. So as somebody who has worked in both the let's say, both the spectra, both in the large company in a large company and in a midsized company also, so what do you think might be driving this increased margin of outperformance besides just face effect? Is it also because of the fact that industry is now seeing more of midsized and small sized deals and that's the reason midsized companies are showing better outperformance? Sudhir, if you look at the record work on what I handle, frankly, we have grown faster in the large size company as well. So where I stand, I don't think size matters at all. What matters is the capabilities you bring to the market. What matters are the investments you do to go and be a trusted advisor to your customers, how you take people along. And that is the and the legacy that you bring in the company and L and T and Larsen and Toubro has huge legacy and capabilities and our biggest playground to experiment before we take to the market. These are priceless differentiations that we have in the marketplace as we go. So I don't think size matters at all. It's all about expertise, capabilities and how we go to market. That's what makes a difference. World is a big leveler. In the new age, it's all about new technologies. If you can continue to focus on fewer verticals like we do, apply technology to it, that will make the world of difference. And that is what is happening in today's times. Certainly. And actually, I think when the acquisition of Mindtree happened, Mr. Shankaraman made this interesting comment that, let's say, 3 years down the line, probably, we'll be the 5th largest IT company in India and perhaps then might be an interesting time to look at integration. Now if you look at the revenue run rate, probably the 3 companies put together might be close to that run rate. So I'm again, it depends on LNG's thought process and their perspective. But if you were to take a guess, do you think these 3 companies would grow at the current pace if they're less unintegrated or you see bigger synergies if they're integrated? I'm asking your personal view. And of course, we all know that L and T will have the final sector on this matter. Zvi, you're asking me a personal view on our 250 people call, but frankly, this is beyond my pay grade, buddy, and number 1. Number 2, all I can worry about is the job and the accountability I have from my shareholders and that is towards LTI. So I think you should talk to Mr. Shankaraman in times to come. Right now, all of us are single handedly focused on job at hand, which is to continue delivering value to our shareholders, our customers and our employees. And at the same time, continue to have fun because once you stop to have fun, none of these things work. Thanks, Anuj. That's very helpful and good luck to all the best Satish. Thank you, Suneet. Thank you. The next question is from the line of Mayur Patek from IIFL AMC. Please go ahead. Hi, Sanjay. First of all, congratulations for a very impressive set of numbers. Just two simple questions. First, in the previous quarter's conference call, I asked you whether this demand momentum is transitory or you think it's long term? And you mentioned that looks like at least a 3 year kind of medium term demand strength in the cycle. So with this current commentary, I assume that becomes is more reassuring thought around the medium term strength of the cycle? Absolutely right, Mayur. I can't see beyond 3 years. I was always told that my eyesight is poor on the long distance. I was always told how far I can see. So 3 years, all I can see. Yes, the demand will continue to be good for 3 years, at least where we stand today. And this result and what market is showing is a testimony to that. Sure. Just one more small question. On the pricing front, we discussed about the demand scenario supply side. Any resilience are you seeing on the pricing front also to pass on this supply side, whatever pressure every company is having? Are you seeing the client opening up to take some drop some price hike? I think we are seeing the Mayur in pockets. There is an opportunity, but there are long standing contracts, etcetera. And today, we are frankly held heads down in solving outcomes for our customers, solving the problems that they have and capture the growth. And but definitely pricing pressures are not there like they used to be there. But this is also an opportunity and we need to think on how we can improve the pricing. But right now, we are still continuing, as we have always said, to be a growth company and look at how can we capture the growth in this lifetime of an opportunity. Thank you. The next question is from the line of Mukul Ghar from Motilal Oswal Financial Services. Please go ahead. Hey, thanks. Hey, Sundar. Sundar, a couple of clarification questions. First, if you look at the last one and a half years since pandemic started, there is a continuous shift of revenues towards offshore from on-site. Initially, the expectations was that this will be more of a near term leisure reaction, but you guys continue to shift more and more things offshore. Now while you have delivered very strong top line growth, this is adding a little bit of a deflationary element to your revenue because an offshore effort usually is less rewarding than on-site. By when do you think this will stabilize and so that we can actually get Apple's SharePills revenue number growth number for LTI? Mukul, frankly, I don't know what a stable thing means anymore. What we have seen is that if you experiment, invest ahead, you can actually execute the new age programs actually 100% from offshore. And there was a time when they talked about Indian industry not doing well because we didn't know how to execute on pods and teams working together in an agile DevOps manner. But today, we see all of that those myths go away and able to see scalability come in, in a defined manner. And this is what is going to continue to there. And today, you know, when you go in a COVID, this is the first realization that everyone has because everyone is either on-site or offshore, right? Everyone is working from yes, it doesn't really matter. And this way you have today global Talent Access, you're taking the work to people instead of people to work. And that is what has actually happened. I don't know whether it's the end, whether it's what is the stable. It can still go down in my view, given the way demand is, given the way attrition is at even for our customers, right? Customers are not able to hire people. Customer also are losing people in double digit numbers. And thankfully for India, we still have the ability to churn out a lot of good quality talent. If we can find some, we will continue to see more offshore movements in some time at least. Sure. No, I think that's quite helpful. The other question and again, I don't want to nitpick, but the cloud insurance security business was a bit modest in terms of the cost factor. P. Vijay Kumar:] Yeah, basically, I was saying not nitpicking Mukul, but I'll tell you. Nikkyan, why don't we answer that? This is only the infra business. Yes. So Mukul, that is only the infra part of the cloud that gets reported under that. But cloud, as you can imagine, is across many service lines. And if we combine the application modernization, cloud engineering work as well as the AirPION cloud and Daton cloud that we see, it has been actually a growth driver for us in this quarter as well and continues to grow better than the company average. Okay, okay. No, that's clear. I thought cloud is supposed to be a superstar right now. So I thought I'll just verify that. It's actually about time we got to also relook at how we reported and we are looking at it. So hopefully, we'll come back to you with a better philosophy going forward. Understood. Thank you. Thanks, Amit. Thank you. The next question is from the line of Arushi Just a couple of questions. So firstly on these, right? So, Sandeep, you mentioned about how broad based the overall growth environment is looking like, the demand environment is looking like. Just wanted to understand, I'm assuming the growth will be across clients. And do that really necessarily need new deals that you typically announce because your numbers on new deals will be done better in past and have grown at a slower rate versus what we are doing today. So high growth rate or sector leading growth rate, is it dependent on new deal wins in the current environment or you can still continue to do it without a large number of new wins? I think revenue is a revenue and revenue is a revenue, Rishi. Frankly, we've always talked about 4 levers, right? Growth accounts, invest accounts, new account openings, large deals, right? And today, when customers are worried about whether their companies can actually compete in the open market, consolidation deals, which are typically cost side, they are low priority items, right? So I think it's not to say the large deals are not there. Vyaches announced one large deal and we are participating on a whole ton of them. We'll see you in December and tell you exact TCV of large deals. So we will tell about that's why you come to that that event. We will tell you about large deals that we are chasing as well. But nothing you cannot grow on the resilience of a company comes when you grow on all verticals. Resilience of a company happens when you grow on all 4 of those levers. But today where we are, the way customers are spending, I think we are able to see a broad based growth in their journeys that they are taking towards dealing in the great restructuring. Yes. So Sanjay, I will just add, right. Folks, as you see, there is the demand environment. But I think if you reflect on what we have been able to do even during the last not just the last 6 months in this financial year, but even the 3 quarters in the quarter here is the ability to navigate real time demand. So today's world is built on speed. The clients are looking to do things at speed. Speed is the biggest differentiator right now and that's what's driving a lot of these transformation journeys. And the ability to navigate real time demand at speed is not something that everybody is good. I mean, I would like to think that we are better than most of our peers at our ability to do that. And frankly, that's what when Sanjay says we are head down trying to on the demand that is there to realize to maximize our return from it because once you lose demand, you kind of lose it forever. So this is the time to capture demand, and that's what we are really focused on, capture real time demand at speed. Great. Thank you. And just a quick follow-up. So given the demand environment and historically, you have done your second halves are sequentially better than first half, but given the kind of growth rates you have delivered in 1H, do you still think that will hold for this year as well? Yes. Absolutely. Okay, great. Thank you so much. Thank you. Thank you. The next question is from the line of Mohit Jain from Anand Rati. Please go ahead. Sir, just one question on retail CPG vertical, retail CPG and pharma. So if you could help us understand the diversification and performance there versus some of the peers? And what kind of demand are you seeing in that particular vertical? Can you just repeat it? We just lost it. Can you just repeat the question? Retail CPG and pharma verticals, there is a divergence in performance between us and other companies in general. So what kind of demand are you seeing in that particular vertical? And is it more geography specific or do you think that vertical is also picking up slowly? See, I mean, again, on a year on year basis, it's 15.3%. I know it's sales in comparison with the 25% overall company growth. But CTG Retail Pharma, I think to the second half of your question, it will pick up in the second half of the year. We are beginning to see some good programs coming in. It will start to pick up. And any color on the type of assignments you are getting there? Or is this more region specific that this particular is picking up, for example, in Europe or in U. S. Or something of that sort that you're witnessing? For us, it's picking up primarily in the U. S. And it's on the back of in fact, we're actually seeing some decent broad based demand across cloud, across security and across ERP, the 3 specific areas in which are the large spend areas in CPG RetailCom. Okay. That's all, sir. Thank you. Sorry. And obviously, data underpins all of this. So in fact, Sanjay has been personally involved in multiple data conversations with some of our CPG and Life Sciences clients. As they look as I said, their data foundations are typically within the ERP. As they look to take it out of those systems to create the real time visibility of not just their operations, but also and their supply chain, but also their entire demand environment, their own customer demand environment. That's a whole new area of strength. Right. Understood. Thank you. Thank you. The next question is from the line of Dipesh Mehta from MK Global. Please go ahead. Yes. Thanks for the opportunity. Most of the question has been answered. Just one last question. Can you provide some update about the data product business, I think, which is one of the focus area for us? Last time you integrated about separate sales team, presales team and development investment, which we are making. So if you can provide some update on that business? Sure. So the data product business that we announced in the last analyst and it has also helped significantly differentiate the data decisions conversations. And frankly for the Fortune 50 clients that we have. And those conversations have really significantly changed the positioning of LTI in the data space, how those customers looked at what we can help them transform. And that an effect of that you see in the kind of analytics and data growth that we have seen Q on Q and Y on Y this quarter. And we're very confident about how it is materially helping us shift the conversations with our client. And it continues to accelerate, and it's considered to excite us as we and with that, we will also continue to invest in building those capabilities because that has materially changed the regard profile of our data business with Fortune 500 customers. And any cross thread index kind of thing, let's say, how many clients we have already onboarded for data for that kind of business? We don't separate it that way today. To be honest, it's part of our overall data offering. So it continues to be very strong across all of our customer base. Understood. Thank you. Thank you. The next question is from the line of Sandeep Shah from Expiry Securities. Please go ahead. Yes. Thanks for the opportunity and congratulations, Sandeep and the team, for a strong execution all around. Thank you. Yes, just one question, which I ask you as an expert on the industry, and it's about industry rather than the LTI in specific. So you are saying that the peer visibility because of the stronger demand is very healthy for the industry. So I just wanted to understand whether the momentum of growth which we are witnessing in CY 'twenty two or CY 'twenty one and FY 'twenty two, will it sustain for the industry? Because I think when you look at the earnings growth of the corporate clients which we address, is looking to come down in CY 20 22 as a whole versus CY 21, which had a benefit of no budget spend in CY 2020 as a whole. So do you believe the kind of demand, the nature of the demand is such that the correlation of the IT spend released versus the clients' corporate earnings growth will no longer be valid even beyond FY 'twenty two as a whole? Or do you believe, no, the growth momentum may remain healthy, but there could be some deceleration in the growth momentum, but it may continue to remain better than pre COVID levels? Sandeep, by what we see today is demand, tech spend will continue. Look at Gartner predictions, and it's a good reflection of what they expect the market to spend. In addition to that, if you look at even a simple data point of U. S. Demand, overall, not only tech, but overall job openings of 10.5 and 7.5 only unemployed people, it's a reflection of how much automation also and tech interventions need to be done for all that to happen. So where I stand today, I can only talk about the conversations that we have with our customers, the demand we are seeing. I wish we had ability to service our customers even more than what we can. But I think in a sustained way, this demand is better than what we have seen for a long time. Okay, okay, okay. But any comments on momentum kind of industrial growth rate? Can it be maintained like FY 'twenty two going forward? You can cut it in 10 different ways. I don't know how to tell you. I can't if you had more people, we would have staff more people right now. So today, where we are, there is a demand for us to in a sustained way we can service for our foreseeable future. Got it. Thanks and all the best. Thank you. The next question is from the line of Abhishek Shandarkar from Incred Capital. Please go ahead. Yes. Hi. Thanks for the opportunity. Just one question on the seasonality. Generally, we have a better seasonality in the second half. I know I have heard your comments about the demand environment and completely understand, but just wanted to get a sense that anything changes meaningfully for H2 for us compared to H1 in a normal year? That's one. And the second The forward answer is no. We are seeing a very robust demand. We will see a good H1 H2 over H1. Good number of deals, good number of good growth across the sectors that we are continuing to see. Next question, Abhijit? Yes. So the second question, Sanjay, is wanted to understand that it seems like currently clients are also creating redundancies in terms of technology, building new and continuing with the old. So Ist, should we read that that is creating a more sustainable cycle right now and maybe that is what is one of the reasons that you're seeing a 3 year vision of strong demand. Are we interpreting it right or maybe that's not the right way to fit? I can't see beyond 3 years to be very honest Abhishek. There is enough demand that we have today. Clients, everyone is looking at new technologies and effectively use that technology, say, in data to figure out how to shrink the time from data to decisions or how to use ERP modernization to solve for new normal, how to go to customers directly for B2B Industries. And that's not a trend that I see it coming down in the short term. So these transformation journeys are all across the industries. It's all across all the processes of the company and they will continue across industries. At least where we stand today, that's what we see. Thank you for taking my question and congratulations. Thank you, Abhishek. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Sanjay Jalona for closing comments. Thank you, folks. It's great, as I said, to be in Mumbai. It's great to be traveling and lovely to be speaking to you again. Thank you for your time and following the company so closely. We are hosting our Annual Analyst Day on 9th December. My team entire team and I look forward to seeing you then. Till we see you or talk to you again, we hope that you and your loved ones continue to stay safe and healthy. Take care. God bless. Bye bye. Thank you. Ladies and gentlemen, on behalf of LTI, that concludes this conference. Thank you for joining us and you may now disconnect your lines.