Please note that this conference is being recorded. I now hand the conference over to Ms. Nikita Raja from the Investor Relations team at LTIMindtree. Thank you, and over to you, ma'am. Thank you, Nirav. Good day, everyone, and welcome to the LTIMindtree Quarter 1 FY 2025 Earnings Conference Call. Today on the call, we have with us Mr. Debashis Chatterjee, Chief Executive Officer and Managing Director, Mr. Sudhir Chaturvedi, President, Global Markets, Mr. Nachiket Deshpande, Chief Operating Officer, Mr. Vipul Chandra, Chief Financial Officer. We will begin with a brief overview of the company's Quarter 1 performance, after which we will open the floor for Q&A. During the call, we would make forward-looking statements. These statements consider the environment we see as of today and carry risks and uncertainties that could cause our actual results to differ materially from those expressed in today's call. We do not undertake to update any forward-looking statements made on this call. I now turn the call over to DC for his opening remarks. Thank you, Nikita. Good evening, and good morning to everyone on the call. Thank you for joining us today. I want to start by expressing my deepest gratitude to Mr. A.M. Naik, who retired as our Chairman and board member last month. As a Founder Chairman, his vision and guidance have helped us establish ourselves amongst the largest IT services companies in the country. We are committed to carrying forward his vision and taking the company to greater heights. I also want to congratulate our new Chairman, Mr. S.N. Subrahmanyan, and look forward to his continued guidance. Let me now share commentary on the market environment and our performance in Q1 FY 2025. Though the market environment remains unchanged, we see some green shoots of recovery. Clients continue to focus on efficiency via cost takeout or vendor consolidation deals. However, we are seeing early signs that they are beginning to deploy the savings and additional budget towards kicking off high-priority transformation programs and making foundational investments for AI. We are seeing this play out more in BFSI and technology, media, and communications, our largest verticals. Additionally, the ramp-up in deals we had talked about in previous quarters is beginning to reflect in our revenues. We are pleased to announce Q1 revenues of $1.1 billion, growing 3.7% in constant currency and 3.5% in dollar terms on a year-on-year basis. Our sequential revenue growth in dollar terms was 2.5%. On the margin front, our EBIT margin for the quarter was 15%, improving by 30 basis points sequentially, and our net margin was 12.4%. Our order inflow for the quarter was $1.4 billion. In the current business landscape, with a focus on cost takeout and vendor consolidation, clients appreciate the clear value proposition we bring, and we believe we have significant runway ahead of us to capitalize on this aspect. Let me highlight a few such deal wins during this quarter. A major U.S. airline chose LTIMindtree to provide platform engineering and operation services, leveraging its global delivery footprint in the U.S., U.K., Poland, and Australia. A U.S.-based insurance and retirement corporate- Can you hear us? Participants, please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnecting. Sir, please go ahead. Yeah. Thank you. I don't know where we lost, but let me just restate what I said just a few minutes ago. A U.S.-headquartered company that provides data center solutions to hyperscalers, cloud, and enterprise customers has awarded LTIMindtree a multi-year deal to provide pod-based management services in application development, data engineering, infrastructure support, testing, and ITSM. Across deals, we see a significant AI play and AI-driven re-imagination. We are also witnessing good activity on MSA signings and expect that to drive growth in the upcoming quarters. Now, let me spend some time on our industry verticals. The BFSI vertical grew by 2.9% quarter-on-quarter and de-grew by 2.7% year-on-year. We see BFS customers starting to scale up high-priority programs with momentum across subsegments. Regulatory compliance continues to be a key spend area, followed by data plus AI, consumer experience, and vendor consolidation. Technology, media, and communications grew by 7.9% quarter-on-quarter and 11.9% year-on-year. Some key themes playing out here include business model transformation and platform operations. The manufacturing and resources vertical grew by 1.8% on a quarter-on-quarter basis, and grew by 10.5% on a year-on-year basis, with a continued focus on areas of ERP transformation, data modernization, and Industry 4.0. Our consumer business saw a decline of 0.7% on a year-on-year basis. Our healthcare, life sciences, and public services vertical grew by 0.1% year-on-year. In terms of geographies, America, which made up 75.1% of our revenue, has grown by 4.4% on a quarter-on-quarter basis. Europe has made up 14.4%, and the rest of the world made up 10.5% of our revenue. We are committed to expanding our global footprint and being the preferred global partner for our clients. We recently inaugurated our regional headquarters in Saudi Arabia's capital, Riyadh, as part of the expansion in the Kingdom of Saudi Arabia and the Middle East. This follows the recent announcement of a joint venture with Aramco to create an IT services company in the kingdom. This will enable LTIMindtree to support, manage, and direct its strategic business initiatives in this region. We have also opened offices in Calgary and Shanghai and look forward to expanding our presence in Brazil. We now have delivery presence across all key global locations. As per our recent survey in collaboration with an external research agency, more than 85% of enterprises are looking to accelerate their AI-related investments. Many customers are progressing from the proof of concept stage and looking to deploy AI use cases across the enterprise. Scaling of these AI solutions within the enterprise will require investments in infrastructure, data governance, data lineage, explainability, et cetera. Our strong presence in these areas gives us a distinct advantage to partner with our customers on their scaling journey. Knowledge management, customer service, intelligent content insights and generation, document summarization, and software engineering are some key areas that are early adopters of AI. I am happy to report that we are assisting a majority of our top 100 clients in AI and related areas. A key impediment to the broader enterprise adoption of AI is scaling. A platform-based approach is critical to ensure that the right security and responsibility guardrails are consistently adopted. We are systematically investing in our Canvas.ai platform to enable customers in this journey. Our investments in Fosfor, our data-to-decisions product suite, and forging partnerships with leading players in this space give us a distinct advantage. These partnerships range from semiconductors to AI governance. In order to thrive in these disruptive times, it is critical that organizations make a significant pivot to AI. Our strategy of AI for everything, everything for AI, and AI for everyone, is helping us drive this cultural change within LTIMindtree, as well as our other clients. This culture change will not only be effective if the entire organization... Sorry. This culture change will only be effective if the entire organization rallies behind it. To energize the enterprise, we organized our first AI-centric event, Ignite, this month across campuses, bringing clients, partners, analysts, and employees together to explore the unlimited possibilities of AI and our work around the same. This in-person event was organized across 6 cities. 30 units participated in it, which showcased 100+ solutions, involved 17 partners, and hosted 50+ delegates from the industry and advisor community. Over 20,000 associates participated in this event, which was a tremendous success. As customers prepare for AI adoption, there is increased spend on tech modernization in data, digital engineering, and enterprise apps. Efficiency gains from cost takeout and vendor consolidation are freeing up funds to support modernization efforts, which is also driving the uptick in demand. We are beginning to gain traction in the platform operations service. We have signed our first major deal in this space in tax and mortgage processing. Our focus is on reimagining the existing processes with a platform plus AI approach. We see a good opportunity to leverage our presence in verticals and other service lines to drive end-to-end process transformation for our clients. I will now turn over the call to Vipul for the financial highlights. Thank you, DC. Hello, everyone, and thank you for joining the call. Let me take you through the financial highlights for the first quarter of FY 2025, starting with the revenue numbers. Fiscal year 2025 started in line with our expectations. For the first quarter of FY 2025, our revenues stood at $1.1 billion, up 2.5% sequentially and 3.5% year-on-year. The corresponding constant currency growth was 2.6% quarter-on-quarter and 3.7% year-on-year. EBIT for the quarter was INR 13.7 billion, translating into an operating margin of 15%, compared with 14.7% in the previous quarter. The absence of project cancellation impact of the last quarter and operational efficiencies led to margin improvement of more than 100 basis points. This was partially offset by headwinds from higher visa costs of 50 basis points and higher SG&A on account of travel and marketing events. The effective tax rate for the quarter was 25.6%, compared to 24% in Q4 FY 2024. PAT margin for the quarter remained flat sequentially at 12.4%. However, reported PAT moved to INR 11.4 billion this quarter, compared to INR 11 billion last quarter. Basic EPS was INR 38.3 for the quarter, compared to 37.2 in Q4 FY 2024. We have achieved further progress in reducing our DSO. Our billed DSO improved to 55 days versus 57 days in Q4, and with that, the total receivable days, including unbilled, is at 78 days for Q1, an improvement of 2 days sequentially. This is in line with our aspiration of reducing the total DSO. The operating cash flow to PAT was 109.9%, against 89.8% in the same quarter a year ago. Free cash flow to PAT came in at 88.6%, compared to 72.6% in the same quarter a year ago. The cash and investment balances stood at $1.36 billion, or INR 11,334 crore, compared to INR 11,525 crore in Q4 FY 2024. Return on equity for the quarter was at 23.9%. As of June 30, 2024, our cash flow hedges stood at $3,740 million, and hedges on the balance sheet were $269 million. As a result of our ramp-up in deals won, our utilization, excluding training, increased to 88.3% from 86.9% last quarter. For the quarter, our TTM attrition remained stable at 14.4%. We onboarded around 1,400 freshers this quarter. We are pleased to announce that LTIMindtree was ranked in the Financial Times Climate Leaders, Asia Pacific 2024 for the third year in a row for its best performance in reduction of greenhouse gas emissions intensity over 2017 to 2022, relative to revenue and transparency and sustainability disclosures. We are also delighted to share that LTIMindtree has attained a fabulous score of 4.7 out of 5 in the FTSE4Good 2024 ESG assessment, with environmental and governance pillars scoring a 5 on 5. LTIMindtree was conferred the winning award in the Disability Confidence and Inclusion category for the second consecutive time at the Bombay Chamber DEI Awards 2024. Recognitions like these are a testament to our continued efforts on the ESG front to create a sustainable future for all our stakeholders. I now hand it back to DC for the business outlook. Thank you, Vipul. We have had a positive start to FY 2025 and are seeing promising, though early, signs of recovery in demand. We expect the momentum to continue in Q2. The broader macro environment has remained unchanged, and businesses continue to adopt agile strategies to cope with the economic conditions. We expect the market to follow this path for FY 2025, where the focus will continue to be on cost takeout, but also on select high-priority transformations. As clients continue building their AI momentum and graduating AI beyond the proof of concept stages, we are well positioned to capitalize on this opportunity. We will remain close to our clients and adapt if there is any significant change in the business environment. With that, let me now open the floor for questions. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone... If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants are requested to restrict their questions to one and then a follow-up. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhishek Pathak from Motilal Oswal. Please go ahead. Yeah, hi. So, I have a couple of questions. Firstly, on BFSI, could you please help define these high priority transformation areas and how these have changed, let's say, from the past quarter, where the banks were just shy of spending on them? That's one. And the second question is, on enterprise-wide GenAI, which verticals, you know, do you think will adopt this scale up the fastest? In other words, which verticals do you think already have a lot of data estate in place? And secondly, which verticals have a better business case to scale up GenAI, in your opinion? Thank you. Okay, thank you. I'll let Sudhir answer the first question, and then Nachiket will follow on. Sudhir? So on BFSI, what we are seeing is in key clients, especially in the banking sector, we are seeing that, you know, clients actually are dealing with high priority transformation projects, which had got paused last year, you know, as they had focused mostly on the efficiency agenda. Some of the programs that were started during, you know, post-pandemic, and are now beginning to, you know, get accelerated as clients look to reduce their technical debt and, you know, build better systems in order to support their businesses. So that's the overall trend that we are seeing, and that's why those high priority projects are back. We are also seeing vendor consolidation happening in this space, as clients look to, you know, basically look to refresh their vendor landscape. We've been on the right side of the vendor consolidations here, in BFSI, with several new MSAs signed with top-tier BFS institutions, in the space. In terms of the AI adoption, I think, it's across the industry. We see many companies across industry segments adopting AI. Of course, BFS and tech tend to lead, based on the already made investments in their data programs, as well as, you know, significant ROI anticipated on some of the AI business use cases. But we are also seeing good momentum on manufacturing, especially on computer vision-related AIs in the Industry 4.0 area, as well as in the healthcare and the life sciences space. So in a way, it's across industries, but these four industries probably would see a lead on enterprise adoption. Great. Thank you. Thank you. Next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi, good evening. Is there, in the prior two quarters, we did have some element of pass-through revenue, but if you look at the other expenses, that hasn't really tapered. So just wanted your thoughts on how pass-through revenue has behaved during the current quarter. And the second one was on compensation increases. Do you believe that those are in line for payout next quarter? Good evening, Nitin. I think as far as the pass-through is concerned, the pass-through in Q1 is fairly similar to what we had in Q4. The growth that you'll see, I don't think the pass-throughs have played any significant role in Q1. The other thing is in terms of compensation, yeah, we are looking at you know our Q3 which is the second half of the year, where we will do the you know wage hike and we are working through that. We are you know kind of at the planning stage as far as that is concerned. Sure. Just one more, if I may. Sudhir, you mentioned that you know, there's a push for high priority projects at this point in time. I just wanted your thoughts on... I see there are a couple of elements at play. One, you have elections which are around the corner, and you have enterprises who haven't maybe spent for 5-6 quarters to the extent that we would have liked. So do you think this is just a bump before elections, or do you think this is something that can sustain and we should see a consistent improvement from here on? How would you think about it based on what you're seeing in the market? Yeah. So Nitin, if you look, you know, our top three verticals have all grown. And when we reflect on this, though, I commented mostly on BFS in my previous response, I think what we are seeing is that the core modernization efforts, right, that clients had started to undertake, are continuing because, you know, the tech debt creates problems with resilience, you know? So what happens is, in fact, when I speak with CIOs, that's the word that is coming up most often, that they're building higher resilience in their, you know, IT systems, as well as modernizing them, which was the agenda. So that agenda is a long-term agenda. So therefore, we feel that those projects will continue. Now, of course, you know, there is elections around the corner, but I don't think, you know. I think what we see clients having done is, you know, despite the macro and, you know, the interest rate situation, they've actually assumed that for the year, for the foreseeable future, I would say for the next 18-24 months, they've assumed a similar environment and are investing, you know, on the basis of that... Now, we'll see whether the election disrupts that, and that's part of the reason why DC also says that, you know, we are calling out this momentum continuing into Q2, and we'll, you know, we'll stay close to our clients and see what happens in the H2 of this year. Sure. Super, that's very helpful. Thank you so much. All the best. Thank you. Thank you. Next question is from the line of Sudheer from Kotak Mahindra Asset Management. Please go ahead. Yeah, thanks for the opportunity. DC, first question on your comment on clients deploying additional savings and budgets. So are we, sort of calling out a trend of pent-up demand playing out here after several quarters of cost and rationalization? I think, you know, if you have listened to our commentary in the last few quarters, we have always been saying that there are the entire profile of spending shifted from transformation to cost takeout. You know, and that cost takeout trend is not changing. It's still going on. And even in the last few quarters, we have seen pockets where clients were, you know, taking the dollars out from the cost takeout initiative and trying to fund the in-flight transformation. So that was going on, but now what we are seeing is that is happening a little more aggressively, as Sudhir articulated. That's pretty much, you know, for the high priority programs, they are trying to ensure that they can restart and, you know, see that. So that, you know, kind of continue with that. So I think that's what we are seeing, and I don't think there is anything, you know. That's where the demand is coming from. And also, if you look at our overall, you know, revenues, you know, the, the deals which we had won, which, you know, was slow to ramp up, they have finally ramped up. So that is also reflecting in terms of our, growth. And, we have been favorably positioned, as Sudhir said, in some of the vendor consolidation. So all these things are helping us. Got it. Second question on the strong growth within technology, media, and communication. If you can add further color on the sub-segmental level, both in high tech and comms, is this growth being driven by the top account, or is it broad-based? Secondly, on the communication side, some companies have still been seeing revenue declines here. Any sense on what we are seeing in terms of our portfolio? Okay, let me request Sudheer to take it. So in tech and services, we are seeing broad-based growth, both in tech and in services. In fact, you know, we're seeing a return to growth in services this quarter. Our comms presence is quite small. In fact, it's a net new vertical for us in certain senses, so we are entering this vertical. We've got a couple of clients, so that's the way to look at our comms presence, you know, that this is going to be, in fact, new growth engine for us in the future. Thanks, Sudhir. Thank you so much. All the best. Thank you. Next question is from the line of Vibhor Singhal from Nuvama Institutional Equities. Please go ahead. Yeah, hi. Thanks for taking my question, and congrats on a solid performance after the, through a rather difficult quarter. DC, my question was on the client buckets. I think our top five client bucket has been quite strong, probably led by the top client as well, and has grown quite sharply. But I think our top five to ten brackets, if we see, has been the, I mean, the issue, I think, all through the year and this quarter also, the line growth on a Q1, Q1 and a y- on-y basis. So any color on that? I mean, why is it that this bucket is something which is kind of dragging our growth down? And what is the outlook on the these specific set of clients? And then I have a follow-up for Vipul. So Vibhor, you know, I think the, you know, on a— If you look at the top clients for the individual quarters, there could be, you know, a little bit of volatility, but on a year-on-year basis, I think the buckets are fairly stable. But if you look at the top 40 clients, they have shown broad-based growth, you know, both on y-o-y as well as q-o-q basis. So I think we are more keen to track it on a slightly longer duration rather than just looking at quarter-on-quarter. And, you know, and there is a, you know, the, the... What did I think? Wider base for top 40. I think, sorry, as DC was saying, right, look at it at a wider base on the top 40. So the contribution of this from a net perspective of the buckets has gone up, you know, increased significantly. So, you know, some of these are based on the cusp, the numbers reduced. But look at the. If you see the quantum of revenue generated by each bucket, that has gone up, and that's what we track. Got it. So, as a follow-up, Sudhir, if I could ask. I mean, the top 40 clients have been doing better than the company average. So, but, that and that automatically means that the non-top 40 clients have actually been performing rather below the company average. Is there any tail-end rationalization that we are looking at, or is it just a function of top 40 growing higher than the other guys? I think you hit it on the nail. I think the rationalization with the tail is an ongoing process, and that is something which will continue as we go along. Got it. Got it, DC. Thanks a lot. Vipul, just one question from my side, on the margins. I think this quarter we of course had a sharp cost in terms of visa costs. But in terms of utilization, which is now more than 88%, going forward, what are the margin levels that you are looking at to take margins back to our pre-margin, pre-merger margin levels of around 18%? Of course, that will take time for the next two to three years, but in the near to medium term, what are the margin levels that you're looking at, given utilization at the levels that they are in? ... So, the margin levers that we are looking at are primarily going to be the growth itself, which will drive the margin. Because, you know, once the growth comes in, and which is what DC said, that we expect the momentum to continue in Q2, that will happen. Other levers that we are looking at is pyramid. The pyramid itself has to be, you know, corrected over a period of time, and that is an ongoing effort which the management team is working on. And thirdly, wherever possible, we have to reduce discretionary spends to kind of, you know, improve the margins. I would say the first and second are the more pertinent levers for driving the margin growth from here. Go ahead. Okay, cool. Thank you so much for taking my questions, and I wish you all the best. Thank you. Thank you. Next question is from the line of Mohit Jain from Anand Rathi. Please go ahead. Yeah, hi. It is continuation from the previous question. Now, what kind of margins are you looking at from a 1-2 year standpoint now that little bit of growth comfort is coming back into, into the numbers? So that is one. And second, while we are looking optimistic from a first half perspective, there is no growth in TCV yet. So how should we look at TCV from, say, last 4, 5, 6 quarters as it was working? Yeah, as far as the margin is concerned, you know, we, I, I think we have highlighted earlier as well that, we have put a program in place, which is to take the margin up over a period of time. I mean, there is a very robust program that we are running as far as the, you know, margin improvement is concerned. That program is going to be on, and then margin is not a one-quarter phenomena, it's a discipline. So that's the thing that we are trying to do at this point of time. So given that scenario, you know, we have our overall goal does not really change. I mean, it's just that we called out, you know, in the last fiscal that, we probably, given where the year was, we probably have to differ in terms of our timeline. So I still cannot define a timeline, but I can certainly tell you that our endeavor is that if the margin program works well, then the margin will keep on, going up, steadily as we get into the following quarters. And what was your next question? TCV growth. So on order intake, you know, if you look at the LTM basis, we're comfortable with where the order intake is. In fact, you know, we've also got several deals which are on the cusp of being signed right now, which will move into Q2. The other aspect to look at is as we have short cycle demand right now, that we are seeing, you know, that is basically that flows into the order intake as we essentially, you know, close that short cycle demand and start to build that, right? T&M billing, that converts from resource requests to billing, and then, you know, that translates into the order intake, and that's what we'll see. So, to think about it more in terms of, you know, we saw this trend. I'm just talking in terms of not the level of demand, but the trend, when, of course, pandemic, when short cycle demand starts with resourcing and then picks up. That's, that's, that's what we are seeing. So, comfortable with where the order intake is right now. Is there a material change in the tenure last year versus this year, full Q, or maybe one Q, if you have that number? No. So when are you talking about the- So my TCV is flat y-o-y, so one Q- Yeah ... 2024 versus 1Q 2025, if the number is same. Yeah. Is there a change in tenure that you have observed, 1Q 2025 versus 1Q 2024? No. So actually, 1Q 2024, we had a very significant large deal that was signed in the high-tech segment at that time, that reflected in that order intake. You know, that's what you saw. On 1Q 2025, what we are seeing is that the deals tenures, in fact, as I said, right, we, we think of the deal tenures in terms of the work that we are doing, right? So as I said, the high priority transformation projects are long-term projects, right? So the deal tenure is the same. It's just the way that clients are looking to contract that is, is, is a bit different, right? I mean, is, is that short cycle demand, right? Resource-based demand. Okay. Thank you, sir. That's all. Thank you. Next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Hi, thank you for the possibility and congratulations on the steady performance in the current quarter. Just wanted to get your thoughts with regards to how one should be thinking about hiring, for us, given where the current utilization is. Also, if you could give us some sense in terms of how should we be thinking about our subcontracting cost, maybe over the course of next 12-18 months? So from a hiring perspective, I think we, given that we are seeing the similar momentum going into Q2, as DC said, that's also resulting into a pretty significant increase in our demand pipeline, and hence our hiring will increase in proportion to that in Q2. Given, as you said, utilization is all-time high, so we will have to step up our... We are stepping up our hiring in accordance with the demand that we see in Q2. And hence, we would see a net headcount addition, healthy headcount and net headcount addition in Q2. Sure. And if you can probably further on the sequential improvement, typically between Q1 and Q2, we see a significant improvement in terms of sequential growth rates. Is that something that you are building as a base case for FY 2025 as well, given what you are seeing with your customers, customer behavior? ...No, I think, if I understand your question, you're talking about any kind of headcount movement in Q2? No, you see, my question was with regards to sequential revenue growth improvement that one sees between Q1 and Q2. Historically, that number seems to see a significant improvement. That's the reason why I was just checking. If with regards to the positive commentary on seeing this momentum continuing to Q2, are you expecting similar trends to play out with Q2 growth being better than Q1? You're basically asking something more than what I have already told you. But, you know, let's... I think, it's fair to say that, you know, we have started on a good footing. We have developed a good momentum, and, the momentum will continue in Q2, that is for sure. And, you know, it's too early to call out for the rest of the year. But at least in some verticals, like I can call out, say, BFSI, especially, I think we can see the momentum continuing till end of the year as well for the full year. But it's difficult to call out every industry at this point of time, but at a broad level, the momentum is continuing into Q2 as well. Sure. Thank you, and obviously appreciate. Thank you. Next question is from Ankur Rudra from J.P. Morgan Chase. Please go ahead. Hey, thank you. Just a few questions. Number one, you know, you've mentioned multiple times the momentum has improved and, you know, good behavior is sustained. Could you distinguish, you know, between what is the change in the underlying demand environment? Because in your prepared commentary, you said it's unchanged. Your client mix behavior and your own execution. Yeah. So, Ankur, you know, when I say the demand, the environment has not changed, it's still a scenario where clients are still focused on cost takeout as an efficiency is a priority. I don't think that is a change, and that's what we mean by that environment is fairly similar. But having said that, if you have seen the growth in Q1, and if I say that the momentum continues into Q2, the factors are probably a few. First of all, the deals that we had closed in the previous quarters, they are now fully ramped up, which is helping us. And as I think we have articulated earlier that some of the... So some of the verticals like BFS, the high priority projects are kicking off. So which means the clients are willing to selectively start the spend. Even in some cases, we have seen some vendor consolidation. We have been favorably positioned in those vendor consolidation. And the other aspect, it gives us the confidence getting into Q2 is, we have signed multiple new MSAs this quarter, which will help us in terms of revenues as we go into the next quarters. Thank you. Maybe a follow-up to that, I think Sudhir mentioned the, you know, short cycle demand that's coming back. How broad-based is that across industries? It's in our top three verticals, which is what I said earlier, which contribute about 80% of our revenue. Would you say this is, I mean, would you, could you characterize it as discretionary, or it's, it's not right to characterize it discretionary in any way? I think the traditional definition of discretionary, I would not use that. What I would say is that high priority transformation programs, the things that are building, as I said, resilience. Some of the core, you know, modernization programs, which is why we are seeing it reflected, you know, and, I'll request Nachiket to build on this, is that in the service lines, right? You look at the service lines that we are seeing this growth in. We are seeing it in data and AI, we are seeing it in ERP, and we are seeing it in digital engineering. So those are the three areas which are, you know, what I talked about, the modernization spend is where, you know, those are continuing, and they're continuing in the core areas of these verticals in our clients, which is why we feel that this will sustain. Yeah. I think we can also add that some of the clients we see, they are making the, you know, the investments in terms of AI. They're building the foundation for AI, and that's the investment they're looking at. Thank you. Maybe just a last, last question for me on the AI side. Is there any way to share how material these AI initiatives are for you, in terms of proportion of the contract or proportion of revenues or, or projects, as especially as you move from, you know, proof of concept to scale? And also as a follow-on, maybe down the road, will this be more of a revenue driver or a margin driver? Well, I think, let me take a stab at it, and then I'll request Nachiket to chime in. See, as far as AI is concerned, our view is that, you know, if I just poll the top 100 clients, we have, almost 85% of those clients are doing something or the other in terms of AI. So and AI is going to be very pervasive. It's like, you know, every aspect of your business, you will be leveraging AI. So it is probably, you know, not fair to... You know, it's probably going to be difficult to kind of quantify revenues as far as AI, but rather look at how, how quickly you can make AI more pervasive within your business. I think that's the focus we have, and whatever we have done within the organization so far, if you heard my co, you know, prepared remarks, where we talked about the event that we organized as Ignite, and we are going to repeat a similar thing in the at on-site, you know, sales with the entire sales population sometime next week. We are pretty much infusing AI into all our service lines so that the organization is absolutely ready in terms of AI. I think those are the aspects which are keeping us busy rather than figuring out-... So AI is definitely important to, you know, kind of, you know, have a capability which will help us in terms of closing opportunities, but it will be all available in pockets very, you know, pervasively across the client organizations. You want to add anything, Nachiket? And, I think, DC talked about AI in everything and everything for AI, right? So the second part, as the enterprises are getting ready for AI adoption, their spend is happening in having GPU infrastructure, getting their data strategy right, have trust and explainability on data, make sure the governance is on the data is right, and then they're building business use cases. So if for them to finally deploy AI, the spend happens in these areas, which is where the demand is seen. So if you actually look at it, as Sudhir said, our demand in the service line is direct reflection of customer spend in getting ready for AI. I appreciate it, Nachiket. Thank you so much. Thank you. Next question is from the line of Dipesh from Emkay Global Financial Services. Please go ahead. Yeah. Thank you for the opportunity. Couple of questions. First of all, just want to get sense about EBIT margin. I think last quarter you indicated about more like, flattish for the year. Maybe our salary rate, now we are doing in Q3, so considering where we are in Q1 from EBIT margin, are we comfortable for, more or less flattish kind of EBIT margin performance for the year and steady improvement in subsequent period, which can lead us to our aspirational margin range? Second question is about hiring. So if you can give us some sense about fresher hiring plan. I missed the Q1 number, which you said, but if you can repeat Q1 number and for the full year, how we are looking fresher hiring plan. Last question is about, I think some of the places you indicated about core modernization, we've seen some uptake. If I look your deal intake, it is not showing any material change. So whether client is also dividing the core modernization into bits and pieces kind of thing, which may give you better visibility, but not getting converted into similar deal intake. If you can give some color around it. Thanks. Firstly, I think on your margin question, yes, we are expecting the margins to improve from here on. Yes, the efforts are there as per our margin improvement plan, which we have already put in place, to improve the margins as we go along, in the year. As we had called out earlier, the only thing we are saying is that the target margin levels that we had talked about earlier, that may be getting deferred by a few quarters. That's why we are not calling it out right now in terms of the timeline by which we will reach those levels. Do you want to take the hiring? Yeah. Second question was on fresher hiring. So I think as DC said, we had a 1400 intake on fresher hiring this quarter. And for the remaining three quarters in the year also, we are as per our plan on fresher hiring. So there is no change to that. And I think with this current 1400, we have also exhausted all the backlog of offers that we had in the market earlier. So we continue to remain on target for our fresher hiring plan. In terms of the core modernization, you know, response, see, the thing there is it's an engagement model. You know, that's the change that they are. So clients are trying to do this within this year, and therefore, there is no time for them to, you know, structure this as a deal and put it out to bid, et cetera. Which is why I said that is why I called it short cycle demand. It's essentially a change in engagement model, where clients are looking to a contract with us. These are the areas that we are. You know, because your core modernization, you have to do in areas of your strength, right? This is so that's why. So it's not. You know, we know that this demand is with us, it's the engagement model that is different. The other aspect, as DC mentioned a couple of times, is the vendor consolidation is also taking place in this sector. As clients are looking, you know, the efficiency agenda continues, right? So that efficiency agenda, those savings are being utilized for these high priority programs. So, you know, being on the right side of both the efficiency agenda as well as the transformation programs is what is leading to our commentary on momentum. Understood. Thanks. Thank you. Next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead. Yeah. Thanks for the opportunity. Actually, most of my questions have been answered. Just a, you know, quick bookkeeping one. You know, if you look at our depreciation and our interest expense, they have gone up very sharply over the last 12 months. Depreciation is up by almost 27%, interest expense is up by almost 67%. Just trying to understand what is driving that and if there is any one-off in here. It's primarily, look, as, as you have yourself called out, depreciation and lease are both relating to, real estate, investments that we have been making, in terms of increasing our, office, capacity. I think we had, talked about it earlier also, that post-COVID, you know, some of these investments had been lagging, and we have been now investing in our businesses and also preparing for, you know, our employees to, start coming back to office in more numbers. We are also initiating a lot of, client, you know, sorry, employee engagement, programs, in order, in order to kind of, increase collaboration and improve the, ... synergies between the employees. So overall, it's an effort in that direction, and it's a part of ongoing business investments. These are sustainable levels, I would say? Yes. Okay. Thank you. Thank you. Next question is from the line of Ravi Menon from Macquarie. Please go ahead. Hi, thank you. And congratulations on the good revenue performance. Wanted to check about the BFSI growth. How broad-based is it? And, you know, which parts of the vertical are we seeing growth in? I think, you know, this is DC here. The growth is fairly broad-based. You know, as I think Sudhir called out, that there are consolidations that we see in some accounts, and especially in BFSI, we are favorably positioned in some of the vendor consolidations. Given the current visibility and the momentum, I think this, at least for BFSI, we can say that the growth seems sustained. I believe. Just a clarification on the TCV. You spoke about MSAs, and, you know, many of these short-cycle programs where it's more about time and material engagements. I guess this is not really included as TCV, right? Because it's not predictable demand and contracted demand. No. So what happens is, as we contract and we get the, you know, the duration of the engagement, that's when it translates into order intake. That's when we take it into the... Other order intake is taken as we can sign a large deal, for example. That's taken immediately. This happens over the course of the year as we, you know, staff and build. Okay, thanks a lot. Appreciate it. Thank you. Next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead. Hi. Thanks for the opportunity. The first question is in terms of wage hikes. Could you remind us, is it Q2 that we are looking at at a wage hike this year? Yeah, it's the second half of the year, and it's Q3. Okay. Okay. And just a follow-up in terms of, in terms of hiring. So given where the utilization is and where our headcount is extra pressure, do you see a substantial headcount addition, possibly more lateral, even in terms of that, given what you're talking on growth? Yes. For Q2, definitely we see a significant increase on our lateral hiring. The increase are also- Okay. And still despite that, we're still maintaining that nearly flat-ish from a revenue perspective, because ideally, second half should start to have the wage hike impacts also for us. Yeah. So, as I said, the margins are expected to remain at current levels or maybe improve from here. But yes, as we decide upon the wage hike quantum and timings, to some extent, that impact will start playing out. So since we have not yet decided on the quantum, we'll, you know, give you further guidance on that as we go along in the year. Okay. Great. So the last one... I think last one in terms of second half- Yeah. We are losing your audio a little bit. Can you hear me all right? Yeah, better. Yeah, so the last one was in terms of second half seasonality. Typically, we have a stronger seasonality in second half because of that kick in for us. So, do you envisage a similar, kind of a scenario, especially when you are talking about, the momentum continuing in BFSI in the second half as well? No, I think when we called out the momentum in BFSI, is because we definitely see that there is a lot of, you know, a lot of opportunities in terms of as Sudhir articulated. There is a growth that we are seeing, that there's a short cycle project that we are seeing in BFSI, and I think that will continue even, you know, we anticipate that that should continue beyond Q2 as well. Okay. Thank you a lot, DC, and all the best. Thank you. Next question is from the line of Anmol Garg from DAM Capital Advisors. Please go ahead. Thanks for the opportunity. So I have two questions. Firstly, I want to understand what kind of deals that the company is winning in AI. So are these more annotation, labeling kind of work, which is generally low pricing in nature, or it includes more of a high-quality work, which can indicate the typical size and duration of such deals? So most of the deals, as I called out, are in the areas of preparing enterprises to get ready for AI. So for us, that AI spend is translating into significant number of data engineering projects, data lineage, governance related projects, as well as the platform build-out project. As we talked about, for enterprise adoption of AI, what's the important element for all enterprises is to look at a platform-based approach in order to have the responsibility and the security elements consistently implemented. So building out those platforms, hence digital engineering type of demand, and then preparing data and explainability and lineage in that data, resulting into data and AI-related demand. That's kind of the demands that we are seeing. And of course, there are vertical-specific and function-specific use cases, but that is a continuous process. The use cases will... You know, it's like a factory model, right? The use cases continue to evolve and various functions within the organization continue to build number of new use cases as we go along. Sure. Secondly, want to understand your take on the supply buildup. So as we are seeing more discretionary demand coming back, should we assume that the company will start materially building up supply? I mean, not just in 2Q, but going forward as well. Or are we sticking to just-in-time hiring and use of subcontractors in case there is a demand spike which comes in? Yes, in the last quarter, we had called out. For us, I think our comfortable utilization levels are 85%-86%, and we are right now almost 200 basis point or even more higher than our comfort level. So we can definitely will continue to build supply so that we are we come back to that comfort level of utilization. And also on the demand, I think as Sudhir said, it's not necessarily the discretionary that we saw in the past, but it is more related to the engagement models being short cycled, but the demand is around the modernization. So we do expect that the demand is more long term, but the engagement models are staffing based, and hence, it doesn't show up in the deal wins in the TCVs. But the demand is more secular demand than the conventional, discretionary that you would have seen in the past. Sure. Sure. Thanks. That's mine. Thank you. Next question is from the line of Abhishek from InCred Capital. Please go ahead. Hi, thanks for the opportunity. Sudhir, you compared the demand to post-COVID, and separately you also mentioned about the demand sustaining till December. Probably I did not understand both these comments. What I'm trying to understand is that post-COVID, we saw a demand for couple of quarters or probably, you know, almost 18 months. So, can you just, you know, repeat or, you know, elaborate that point, you know, if it be useful. Thank you for taking my question. Okay. Yeah, I think I should clarify what I meant by post-COVID. Post-COVID, what happened was there was a modernization spend across the board, and that involved significant moves. For example, you know, a lot of cloud migration, et cetera, et cetera. There were significant areas, including work, a lot of work in the experience area, et cetera. Which is why there was a combination of essentially, you know, transformation projects and, you know, significant discretionary spend that happened. Now, what we are not seeing is a return of that discretionary spend. What we are seeing is those transformation projects that frankly started around that time, which is... And these are long-term programs for the largest, you know, these are Fortune 1000 companies, right? So they, they run these programs over multiple years. Those programs, if you remember, we had talked about having being paused and, you know, or slowed down last year as clients looked to do only or basically prioritize the efficiency agenda only. Those are the programs that are now coming back on track as clients seek to, you know... In fact, that those, pausing those programs has caused some issues in their IT estate, and therefore clients are looking to get back to those programs and accelerate those completion of those programs. That is the demand we're seeing coming back. The discretionary part, we have yet to see. Understood. Understand. So just a follow-up to that. So, fair to assume that, you know, at least for the next two or three quarters, I mean, I understood what has already been commented, but, from a demand perspective, fair to say that, you know, these short cycle projects will scale up our pipelines at least for the next few quarters? Yeah. Okay, you know, I've used the word short cycle. Perhaps the better term would have been sprint-based, right? So clients, most of these modernization programs, that Nachiket was talking about, are a combination of digital engineering, data, et cetera, right? And these are run in agile methodology. So the agile methodology is basically you run sprints and you fund the sprints. So I think that is perhaps a better way to explain this. There are the sprint-based release of funds is available to us, and that's why we know that this is, you know, demand that is almost exclusive to us and will continue, at least in the sectors, you know, we specifically called out the FS as a sector for it, and that's what we are seeing. So that's the best, that's the way to look at this. Perfect. Thank you for taking my question, and best wishes for future. Thank you. Thank you. Next question is from the line of Girish Pai from BOB Capital Markets. Please go ahead. Yeah, thanks for the opportunity. There was some discussion around vendor consolidation, where there is a refresh of the vendor landscape, and you mentioned that there are multiple MSAs run. So, under what, I mean, what is it that you did or what is it the incumbent didn't do, which led you to get those kind of those number of MSAs? I mean, I wouldn't say there is one secular trend across all of these MSAs. Each of these, you know, MSAs were signed, you know, in different verticals with different clients or different requirements. I think, but what I'm saying is that the vendor consolidation trend continues as part of the efficiency agenda of our clients. And there is, I would say, in certain cases, you know, that I can call out, there are some vendor-specific issues that our clients are seeing, which is why they're also looking at consolidation. Okay. My second question is, I think you talked, I mean, the industry has been talking about some ramp downs and reprioritization by customers. So in this particular quarter, you didn't see any of the clients do that? No. Is that how I should look at it? Not at all. This, I don't think... We talked about some cancellations in the last quarter. This quarter, absolutely, there's nothing like that. Okay, one last question. Saudi JV, when will it ramp up, and will it have similar margins to the corporate margins that we have today? Well, okay. So Saudi JV is in the incorporation stage right now, and incorporation, you know, it has multiple jurisdictions need to give us approvals, for the incorporation to be completed. So we are in that process right now. It will take time to ramp up, so, you know, as we once we incorporate and start to ramp, we will give you more guidance on that at that time. Okay. Thank you. Thank you very much. Ladies and gentlemen, we'll take that as our last question. On behalf of LTIMindtree, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.