Ladies and gentlemen, good day and welcome to the Tech Mahindra Limited Q1 FY 2023 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. C.P. Gurnani, MD and CEO for Tech Mahindra. Thank you, and over to you, sir. Good morning. Good evening. Thank you for joining me on the Q1 FY 2023 analyst earnings call. Again, welcome, and I do pray for your good health. You know, overall, as you know, Tech Mahindra is a company driven by purpose, and it's people-centric and performance-driven. On the purpose side, Tech Mahindra continues to be recognized for their focus on ESG and focus on sustainability. We have, you know, been rewarded, awarded, and more or less continue to set the benchmarks in sustainability. On the people-centric side, our chief people's officer is one of the proud recipients of the Golden Peacock for HR Excellence. We have also been recognized as the most preferred workplace at the India Today Summit. I'm just briefly covering what has happened during the quarter, and we have also improved the gender diversity from 34.1% to 34.4%. In terms of performance, I would like to reiterate that the big, bold steps that we took in developing some of the capabilities, 5G, metaverse, the Makers Lab that we set up at eight different locations, you know, continuing to, you know, invest in data and AI labs. Continuing to invest in sports tech vertical with platforms like FanNxt.Now, new platforms like NetOps.ai, I think is all coming together, and we are able to deliver sustainable growth, and we are able to create value for our customers and partners. I know Rohit will cover the performance results in greater detail. On the growth side, we are now in constant currency at $1,632 million. Comms has grown 3.9%, and enterprise has grown at 3.2% in constant currency. I also have an honor of welcoming two new verticals into billion-plus class. I mean, comms has been there for a very long time. But the new 1 billion club now has BFSI and manufacturing for Tech Mahindra. The company continues to be driven by new age technologies, digital transformation, and more importantly, business transformation. Our EBIT margins have been a little bit under pressure, but as a company, we are determined to reverse the trend. You know, what I've committed to my board is, this is the lowest we have gone or we will go. We will be working together, you know, with my transformation office and my leadership to look at many operating levers, particularly on utilization, particularly on, you know, efficiency and productivity and the pricing levers. Again, Rohit will cover this, but I just want all of us to recognize that, building technology at scale, building two-tier cities, you know, delivery centers and preparing for the future. Yes, there has been, you know, the reported EBITDA margins have been lesser than what we had originally probably projected. In terms of our pipelines, I think both the sectors are showing a very healthy pipelines. We track our pipeline for existing accounts, new accounts. We look at digital transformation. We look at, you know, the business transformation. We also very actively monitor our deal conversions. As I indicated earlier also that the focus is to deliver between $700 million-$1 billion of deal conversions every quarter. This quarter also we would be, you know, sharing with you that, we booked about $800 million. Clearly, you know, firing on all cylinders. I know that, the two internal focus areas, number one is organic growth and number two is to bring back profitability on the track. I'm confident that these two, you know, focus areas coupled with the growth, industry-leading growth, I think you would find us much better aligned and much better prepared. In terms of the economic challenges, as of date, we see the deal flows to be strong. We do analyze every account, every sector, about the potential. We have a dedicated task force which is not only looking at geographies, but also looking at the various verticals and what our response would be. I can only say that as of date, while there may not be a general consensus on, when the headwinds, the economic headwinds will start pinching us, but overall, I think we are in good shape for the next few quarters. That's really the opening commentary. For all those people who are chess lovers, I can only say that, Tech Mahindra is very proud that we have been chosen by the International Chess Federation to be the digital partner for its 44th FIDE Chess Olympiad, and it's the first time, it is taking place in India. It starts on 28th in Chennai, those who would like to join us. You know, we on the ringside of the Chess Olympiad, I mean, you are welcome. Again, thank you. Thank you for your support, and thank you for your confidence. I'm handing over the call to Rohit to get an update on financials. Thank you. Good evening, everyone. Let me now cover the company financials for Q1 ending June 2022. We ended the first quarter with revenue of $162 million versus $160.8 million last quarter, up 3.5% QOQ in constant currency. Growth was broad-based, as C.P. mentioned, with CME growing 3.9%, Enterprise growing 3.2%, both in constant currency terms. We had another quarter of strong deal wins with our TCV at $802 million. Revenue in INR terms was INR 12,708 crores versus INR 12,116 crores in Q4, up 4.9% quarter-over-quarter. The EBIT for the quarter was at $177 million in INR terms 1,403 crores versus $211 million in Q4. EBIT margin for the quarter was at 11%, which is a reduction of 220 basis points QOQ due to higher salaries, sub-con related costs, and some large deal transition costs that we saw. Another reason for reduction was revenue and Visa seasonality that we see. Normalization of G&A and sales cost was another reason of margin reduction, offset partially by pricing benefit that we saw. Moving below EBIT, other income for the quarter was at $16 million versus $42 million in Q4. Forex was at $7 million compared to $28 million in Q4 2022. The tax rate for the quarter was at 22.8%, which is higher compared to 17.5% in Q4. This is because we had higher reversals of tax provision related to FTC benefit in Q4 and partially also in Q1. Our normalized rate is in the range of 26%-27%. The net profit margin for the quarter is at 8.9%. Our free cash flow for Q1 FY 2023 was at $72 million. Our DSO has increased by three days to 100 from 97 in Q4, partially impacted by currency because of data revaluation. As mentioned earlier, we will continue to consistently follow a rule-based hedging policy. As of June 2022, the total hedge book was $2.28 billion versus $2.22 billion in Q4 2022. Based on hedge accounting treatment, the net mark-to-market gain as of thirtieth June was $68 million, out of which $11 million is taken to P&L and $57 million is on to reserves. We had a cash and cash equivalent of $1.114 million. Rupees terms INR 8,801 crore. Overall, the demand momentum, as C.P. mentioned, continues driving growth while the supply side pressures are impacting profitability. We're committed towards improving our profitability with targeted actions that should help us tide over the short-term pressures. With these remarks, I now open the floor to questions. Thank you. Thank you very much. We will 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Sandip Agarwal from Edelweiss. Please go ahead. Sandip Agarwal, your line is in talk mode. Please go ahead with your question. Mr. Agarwal, please unmute your line from your side if muted. As there is no response from the current participant, we'll move on to the next question from the line of Ravi Menon from Macquarie. Please go ahead. Hi, thank you for the opportunity. Rohit, I just wanna check if there is any one-off in the G&A, like a bad debt provision or something like that. It seems to be up very sharply quarter-on-quarter. Yeah. Last quarter we did have some gain, which was one-timer. This time we've had increase in provisions, because of which the quarter-over-quarter variation is looking large. Could you quantify the provisions this quarter, please? We had a provisions range of around $6 million. Yes. You know, we look at it would be great if you could share your vertical breakup in a quarter-on-quarter and constant currency growth because of the cross-currency movements being sharp this quarter. It's a bit difficult for us to figure out, you know, what's happened to the communications vertical, for instance. Yeah. From a growth perspective, if I can go one by one on a constant currency, sequential, quarterly, as I mentioned, comms was 3.9%. When you look at manufacturing, that has grown 5.7%. Technology has grown 6.4%. Retail have grown 6.8%. HLS and others have grown 2%. BFSI has been mostly flat. While on the reported side, it's impacted more because of FX. Thank you. That's all. Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi. Thank you for taking my question. Firstly, on the large clients, if you look at the top line performance on a quarter-over-quarter basis, it's looked like a little bit of decline. That could be an element of FX. But even if you strip out that, it seems quite weak. Anything going out there, especially in the top five client bucket? Yeah. Mostly, you know, it's FX that you see, and then, you know, there are certain projects that, you know, for the quarter, you know, stopped and the new projects are gonna start in the following quarter. Beyond that, there's nothing. If you look at the broader trend, I think we've expanded beyond that. Outside the top 20, the growth has been substantial. That's a good sign, and that's where we've had historically certain deal wins also that are ramping up. The base and the top customers are also spreading out. Okay. Could you just talk about the puts and takes on margins? I think there would be some impact of wage hikes which may come in the coming quarters. What would be some of the headwinds and what would be the tailwinds? What gives you confidence that this is the bottom for the margin, and it will go back to the range which you had historically talked about? Thank you. Yeah, sure. From a Q2 perspective, headwinds predominantly is only one which you mentioned, which is gonna be the wage hikes, right? From a tailwind perspective, we've had certain good outcomes from pricing. I think that we have a good funnel and visibility, so that will continue giving us some tailwind in Q2. We also will have lesser impact due to the visa and mobility business impact that we saw Q4 to Q1, so that will ease out a little bit. That will give us a favorability. Other big area which C.P. also reiterated that we have a lot of focus on operational efficiency. There we put plans to get our utilization back up. If you remember, we've spoken a couple of quarters back that we're consciously investing in the talent pool, investing in bottom of the pyramid. That utilization trend we have concrete plans to get up by delivery unit by geography in the current quarter, which will give us some positive tailwind as we look forward. Another big focus for us, we have almost 8%-10% gap on our offshoring revenues versus peer set. There also we have a clear plan by you know delivery unit and geo action to drive offshoring in the current quarter. As well, these factors will continue through the year. I'll talk about Q2 and then some of this will continue through the year. Those are the big actions that we're gonna drive from a tailwind perspective. This quarter we did have some large deal transition costs which I mentioned. Those won't be repeated. As we see that will also give us a benefit in Q4. Thanks a lot for the detailed answer, Rohit. Lastly, on the cash flow, the conversion of PAT into free cash flow for last two consecutive quarters has been weaker than your usual trend. What are the factors that have driven that, and how long will it take to come back to the you know, historical trend that you used to deliver? Thank you. Sure. I think, this time a bit of the play was also driven by FX. But irrespective, I think operating performance will get better as we look at Q2, Q3. Between the next two quarters, I think we will get to a similar FCF conversion rate that we've seen in the past, closer to the range of 90%-110% today. Thanks a lot. Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead. Yeah. Thanks for the opportunity. Two questions. First, can you help us with the margin work in Q1? I think you indicated some of the factors. If you can break it up for us, the contribution of those factors. Second question is about the margin projection. I think we are suggesting good confidence about margin recovery. But considering, let's say, sometimes that we used to indicate 14%-15% as EBIT margin is a good range, considering overall business mix and then future potential is maybe we can increase it to further over medium to long term. By when do you expect it to be we can again back to our optimal range of margin projection? Thank you. Specifically for current quarter work versus last quarter, as I mentioned, we saw approximately 50 basis points expansion due to pricing actions, and we've been talking about it for the last, you know, previous quarter that we're working at it, so that's giving us a positive outcome. We've seen salary, subcon and large deals. Those three combined contribute a headwind of approximately 100 basis points in the current quarter versus last quarter. Visa and seasonality in the mobility business jointly contribute approximately 80 basis points. Those were the three big factors on the direct side. Then, there is a 1% impact on G&A normalization. We had some good impact in the last quarter, which is getting normalized, and some of the impact on the provision also that we have. Due to which we are at 1%, 100 basis points negative impact versus last quarter on the G&A part. Those are the big drivers that lead to a 13.2%-11% drop. Second part of your question, I think, as we look forward, a lot of these actions that are articulated are in motion. We have a very detailed micro plan that we're working on. You know that gives us the confidence as we move forward that every quarter sequentially given this as a bottom, we will increase margin anywhere between 100 to 150 basis points. By the end of the year, you know, I think we'll be in the range of around 14% EBIT. I think I mentioned earlier 15, but I know where we are right now. 14 seems like a more 4Q exit run rate rather than 15. One moment please. Is there any next question? Can you take the next question? Mr. Agarwal? Mr. Sandip Agarwal from Edelweiss. Sorry, I was on mute. Good evening. C.P., thanks for the update on the business side and also good explanation on the revenue part. C.P., what are you seeing in the market today? Are you seeing increasing seriousness of the clients towards conservatism given the macro situation, macro environment and or you are seeing the continued spend or the inclination to spend money? What is that you are seeing in the market today versus you were seeing six months earlier? How has the client mood changed? Are you seeing any kind of change in the client perspective mood? Or they have really done some action on that? Like, they have taken some things longer time or delay. Any kind of, you know, restraint from the aggression by which they were spending earlier? Are you seeing any kind of sign, early signs of that? Yeah, Sandip. Thanks for the question. This is Rohit. Yeah, I want Manish and Jagdish to comment about comms and enterprise verticals, and then I'd like to also summarize at a corporate level how we're tracking in terms of what changes are we seeing. So, Manish, first probably to you. Sure, Rohit. Thank you. Sandip, thank you for that question. You know, I think it is clearly there is a lot happening in the macro, geopolitical, economic scenario, and hence the question is quite valid. There are clear discussions in the various customer environments about what is exactly in store. That indeed is happening. Is that resulting in any specific macro level trend change in terms of the spend patterns? We haven't seen any evidence of that yet. There are a one-off conversation that happens, but that is very strictly limited to that particular company's own individual decisions, which I think is nothing to do with the overall macro scenario. At this point, I think like C.P. rightly, or Rohit mentioned right up front, the funnel is pretty robust. The decision cycles continue to remain exactly as they were six to seven months back. The areas where the discussions are happening in the telecom media space continue to be in the space of what is called digital transformation. The holistic digital transformation from network modernization to driving more velocity on underlying digital platforms, whether it is cloud or data, or customer experience. I guess that continues to happen. We haven't seen any net-net, in short, before I hand over to Jagdish, I would say at this point, we haven't seen anything material to come back and report at this time. No, I think Sandip, thanks Manish. The outlook, I think, for us hasn't changed. It's very positive from a deal win and the pipeline robustness perspective. I think we all have to recognize that in the last couple of years, a trend that has got started in terms of redefining or rather modernizing the core of everyone's enterprises business. What I mean by enterprise is the organization's core platforms and solving that problem, that we don't see any letdown. The pipeline of what we've talked about, approximately, upwards of INR 700-800 billion of TCVs, we see a similar trajectory every growth. I personally drive the large deals across the company and therefore that large deal momentum I still see to continue. From a deal win perspective, I don't think there is any letdown. Industry-wise, all of them, as Manish said, are focused on digital transformation, so supply chain issues. We called out four key areas, right? Cloud, connectivity, engineering and experience. All those four key areas, we think that, even if there is an economic slowdown, the investment on those areas is something that the companies and enterprises will have to do, if they have to be relevant. Therefore, that part we feel very confident about. I hope that answers your question, Sandip. Yes, thank you. Thank you, and best of luck for the current quarter. Okay, thank you. Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead. My question has been answered. Thank you. Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Hi. Thanks for the opportunity. This question is to Manish Vyas. Just looking at the macro hiccups which are being increasing, what we are reading is on the 5G CapEx, clients are maybe becoming slightly cautious. They are accelerating where they can find the paid consumers, but where they are not finding the paid consumers, they may become slightly more conservative. Whether this trend can lead to any negative surprise in the telecom growth recovery, which we have seen for almost four to five quarters. Do you foresee any downside risk to the growth momentum in the telecom going forward? Sandeep, again, thank you. See it like this. The 5G spend in the market that we're spending is not necessarily a function of added consumer revenue. The focus on 5G was always to continue to build the new modern network in terms of replacing what is called the carrier adds, the capacity build. Instead of building the carrier add on 4G, it was happening on 5G and that trend will continue. The revenue uptick for the telcos was always going to be more around enterprises, not as much about the consumer business. I mean, that's a normal cycle that will continue. That's not really necessarily a driver in anything changing. As far as the sectoral performance is concerned, I'm assuming you are referring to our performance versus the industry broad-based performance. I don't think, like I said earlier, that whatever is happening at a macro level is giving us any indication of a slowdown in the kind of opportunities that we are engaged in driving transformation at a process, at an operations, at a system and at a business design level or customer experience level. For that matter, of the network level. We are not seeing any change to the pattern of the kind of funnel that we are building. Okay, fine. Thanks. Just a follow-up to C.P.'s opening remarks, where he said that we are confident for the growth in the coming few quarters. While some of your large peers are indicating a macro may start impacting the second half of the growth. While I'm expecting that Tech Mahindra is alluding that even the second half of this calendar year, we may see a healthy growth. What is driving this confidence as a whole? Sandeep, I think few things. One is we are continuously monitoring the pipeline, and the pipeline's looking pretty strong, maybe better than what we've seen in the past. Now the question is of deal conversion. If the trend continues what we've seen in the last three to four quarters of the range we're in, that continues over the next quarter or so, couple of quarters, I think we should be in that zone of continued. Demand environment, right? Which is what we're seeing right now. Of course, you know, it's a very dynamic world, so hence we are monitoring the situation through constant data as well as client interaction. Continue to you know, put that feedback back into the way we we you know looking at the next half. So that's kind of way we're doing it. But I think qualitatively, as Manish and Jagdish mentioned, you know, there's from a client communication discussion perspective, there's not some significant change as they move into the second half that we've seen. That's why that's reflecting in our data and that's the view right now. I'll also like Vivek to add his view on BFSI that he's seeing or HLS that he's seeing, you know, from a discussion with his clients that he can share with the group. Yeah. No, thanks, Rohit. Not to repeat what, you know, Manish, Jagdish and Rohit have said, but just reiterate that we haven't seen any budget reductions. I think what gives us a degree of confidence is the pipeline. I think we've had a continuous win of large deals. So I think we have a backlog to execute on. I think that does put us on a reasonably good footing as we look forward for the rest of this year. Lastly, I think not only from the big-ticket macroeconomic indicators which has everybody confused. I don't think anybody has an answer. What we are focused on is more specifically looking at different industry subverticals and the impact they may have. Then obviously at the next level, which are our specific clients of any specific impacts they would have. What we have is a fairly laid out thought process on how we would react if we were to see any early signs. Okay. A last one, if I can squeeze, just on the margins. Rohit, in terms of your comment, how much dependence are we placing in terms of a pricing as a change in terms of your commentary of targeting 100-150 basis point increase in the next three quarters? Just a follow-up on the wage hikes. What percentage of employees being covered in the first quarter? Is it effective April? What percentage is pending and how the balance wage hikes are scheduled? Yeah. Sandeep on the pricing, maybe let's talk about pricing first. We've sequentially quarter-over-quarter seen increase in the quantum of price increase we've got. This time the impact, as I mentioned, was 50 basis. What we look at next quarter is similar or better outcome of that. But outside of that in the second half right now, while we continue to drive it, I think the view is, you know, it's mostly first half factor as an upside for us. We've not baked in significant upside in the second half, right? That's pretty much on the pricing side. In terms of wage hikes, it's all from a company perspective, while we do constant interventions through the year because it's not the same world as it was few years back. There's usually a lot of retentions and niche skills interventions that happen through the year. From an annual cycle perspective, that for us will be effective Q2. Broadly the impact there is gonna be around 100 basis. After 2Q all 100% of the employees would be covered on an annual wage hike? Yes, that's right. Okay. Thank you. All the best. Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead. Hi. Thanks for the opportunity. Rohit, just one clarification in terms of what you said, the 100-150 basis improvement starts from 2Q or it's more in the second half of the year? Yeah, it starts from 2Q and it continues through 3Q, 4Q. That's how our actions are tracked. As I mentioned, right, from a Q1 to Q2 perspective, some of the impacts that we've seen, negative, will get normalized, as we move forward. For example, from Visa, the Visa spend, that seasonality impact will lower down. Beyond that, the large deal one-off transition cost that I mentioned, that will not get repeated. So that will kind of offset a little bit of the wage pressure that we see. Outside of that, the operating actions on utilization increasing from 80 to 83% to the range we're comfortable with, which is 87-88 through the year. Some of that benefit will come in Q2. Similarly, offshoring, we have specific targets by month that we will be driving as we move forward. Will give us that range in each quarter as we move forward. Rohit, in terms of subcontracting, because that saw a further increase to in excess of 16%. What is the outlook there? Are we looking at that also being a lever as you go through the year? It is a lever. We are kind of, you know, while we're pushing that, but that is also a little bit of a cost, you know, in terms of stickiness, available for us to act easier if we see a demand slowdown in the second half. If that scenario comes, right? What you've been hearing from others, while we don't see it, but there's so much of confusion what people are saying, what the outcomes are reflecting. When you look at us entering the second half, this is a relatively easier bucket for us to act on, right, and reduce as we move forward. As we look at it right now, if it's a you know sub-con reduction initiative where you know we get some benefit through that and optimization, we're looking at one-to-one replacement from a headcount perspective more as we move forward for the second half rather than immediate actions. Okay. Thanks a lot. Thank you. The next question is from the line of Viraj from SiMPL. Please go ahead. Yeah. Hi, thanks for the opportunity. Most of my questions have been answered. I just have one question. I don't know if Mr. Gurnani is still on the call. This is regarding the investment, you know, approach in terms of acquisitions and investments which we have been making for last several years. You know, in 2022 we made a significant amount of investment. If I were to look at the impairment part, you know, we took something like INR 40 crores, 43 odd crores of impairment. Cumulatively in last four years alone, you know, it's in excess of INR 1,100-1,200 crores. Just trying to understand how should one really understand, you know, the benefits of the acquisitions or the investments we've been making, because the amount on the impairment is also quite sizable. Just wanna understand, you know, if you can provide some perspective. Thank you. Viraj, maybe I just add a few sentences and then, you know, Vivek, who heads our corporate business development function will add on. A couple of things. One is from an impairment perspective, you've got to look at it at a consolidated level, what's the impact versus standalone? The numbers you're looking at are more in subsidiaries and standalone numbers. The way it happens is if we get an acquisition asset, the idea for us and the approach from an M&A perspective is it's changed versus what we had 4-5 years back. Where, you know, now we are integrating the companies and the offerings, solutions into our core business. Hence, when we look at any acquired company, the way we look at it is more like a measurement unit across legal entities. Hence the business that happens through that offering grows in that stream, which is not reflected in the legal entity. Hence at a legal entity level, you might see an impairment, but at consolidated level, that's not the case, right? That's kind of broadly the way it is. That's why not to correlate back to the M&A execution strategy. We continuously through regular discussions with folks like you articulate our change in strategy, how they're performing, and we continue to do that as we move forward to show more and more transparency around our numbers on acquisition performance. I want Vivek to add on some of the points around this. Yep. Thanks, Rohit. I think just from a M&A approach, both from a transaction perspective and integration and synergy, I think what we've said for the last couple of years is that, you know, our acquisitions are meant to be integrated into the core of the business. They have to become an integral part to our service offering of how we go to our clients. More and more our acquisitions are part of one TechM rather than looking at them as individual operating businesses which we've acquired or invested in. I think the success in some part is reflected in our large deals win over the last few quarters. I think we've seen a significant uptick and sustained momentum in our deal wins numbers over the last few quarters. One of the things I would attribute that to is our success in integrating a whole host of capabilities we've acquired over the last couple of years. Hence we are more relevant to our customers' needs and we can offer them a wider solution. I think that's one point. I think in terms of a part of your question around our investment approach, I think we said this last quarter, and I just want to reiterate. I think the management team recognizes that we've had a busy M&A period over the last couple of years. We will be very selective. Our focus is on integration and driving synergies in the short term out of what we've already acquired. Okay. Just two parts. First is, you know, it's more of a suggestion that, you know, maybe in the investor presentation, if you can kind of share on us two, three years or five years, you know, the acquisitions we made, how has that kind of added and in terms of, you know, increase, deal wins or sales win rate or cost synergies? Because probably it's not coming out clearly to us as investors. That's our suggestion, if one can just put some perspective there, in the form of charts or some data points. Second is, you know, if I look at this particular quarter, you know, so the CTC acquisition happened in Q4. You know, the kind of scale and the profitability that company made, we also kind of paid a good valuation for it. If one were to kind of better understand the organic versus inorganic growth rate, what would that be like for us in Q1? Specifically on the margins, because some of those acquisitions like CTC are very high margin businesses. If one were to kind of dissect that from the- Our numbers and just look at the organic business profitability, is it right to think that the pressure and the profitability is even more severe than what we see on the reported numbers? Thank you. I know there were a bunch of questions. I'll try and address one by one, and if anything is left, please feel free to prompt me. I think in terms of the information suggestion, currently, we share that at the Analyst Day event, so we're doing it once a year. We will discuss it internally and see how practical it is to do it more frequently. As we said last year at the last year's Analyst Day event, we committed to giving the transparency once a year on overall performance, synergy, et cetera, of the acquired businesses and their integration status. I think specifically to your question on CTC, it was merely the full quarter last year. Last quarter, sorry, because we did this middle of January. So I think it was 11 weeks for the last quarter also. And so it was largely like for like, especially when you consider the currency impact. As you all know, the euros, which is what the accounting currency of further acquisitions, has taken a massive hit against the US dollar. But overall, I think the business remains on plan, you know, it's early days, we recognize, but it is on track. I think the only other item which relates to your question about margins on CTC. You may recall that that business had a small setup and operations in Belarus. With the advent of the war in the region, some of our customers were uncomfortable with continuing to work in Belarus. Over the last few months, we have wound down our operations, our customer operations specifically, in the country. We managed to relocate most of our employees to other parts of Europe, if they were willing to. It has meant that we've incurred some one-time cost on that relocation. You know, it did not impact billing or revenue. You know, we do expect the newer operating model of a more distributed delivery across Europe to be sustainable going forward. Okay. Thank you. Thank you. The next question is from the line of Ravi Menon from Macquarie. Please go ahead. Hi, thank you for the follow-up. Just wanted to check, I mean, if you're seeing no change to the demand environment, why have we not really added pricing pressures? That could be an important margin lever. You know, it looks like we really don't have any bench pressure at all because utilization, including and excluding trainings at 83%. Yeah. I think as I mentioned earlier, we've hired significant freshers last couple of quarters, and our endeavor is to get them billed, trained, deployed. I think that's been the internal focus. As we move forward, get more streamlined on that model as we move forward, we'll continue to add that sequentially over the next few quarters. Okay. I think that is on the cards as we move forward. Okay. Thanks a lot. Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Okay. Thank you for taking my follow-up. Two questions. Firstly, the two large telcos that reported numbers in the U.S., they lowered their margin and/or FCF guidance for the full year. In this context, have you seen any prioritization of spending happening by them in terms of what budgets are they prioritizing over others? And is there any assessment done internally of any particular projects that could potentially be at risk if such prioritization were to take place? As I mentioned, I think at a corporate level, while there are one-off discussions happening, nothing significant from a trend perspective to call out. You know, I still ask Manish, Jagdish and Vivek, who handle different aspects of business in the U.S., can comment quickly on have they seen anything like that on a particular telco? I think, Rohit, the question is more specific to a couple of telcos that have announced the results recently. Their observation is correct and valid. Like I said, there are some conversations that are happening very specific to a few project prioritization. Incidentally, all of them are around continuing to drive the digital transformation process a little harder and faster. Some work that will probably get shifted from moving work to a cloud to more driving the data intensity or customer experience transformation. That kind of reprioritization of some of the capital budgets may happen. Those are, you know, part and parcel of also what program is deriving greater value than the others, and what may result in midterm to long-term benefits. I think it is in the realm of that kind of a conversation, not necessarily a reaction to a certain quarter performance. That there could be, you know, discussions around more a long-term impact is probably something that I don't think I can comment on it today, because we haven't seen any such reaction from anyone at this time. Thank you for the detailed answer. Second question is for Rohit. Amortization expense related to last few acquisitions have impacted margins in FY 2023. How should one think about the same going beyond FY 2023? Would that be a margin lever? If yes, how big? Also any lever on margin improvement from portfolio companies that can help you in the coming quarters? Thank you. Yeah. From an amortization sort of perspective, year-on-year on FY23 to FY24, there'll be very marginal change of significant benefit at a company level. But we will continue to see certain other management cost benefits as we move forward, which would help margins. You know, maybe I'll ask Vivek to also add on some of the synergy actions that he's driving that will also benefit. Vivek, you can add as well. I think thanks, Rohit. From a short-term impact, there are two items related to acquisitions which go through the P&L. Some of the earn-outs, which are, you know, linked to continued association of the founders, they go through the P&L. The amortization, as Rohit said, it's honestly fairly complex accounting of, some impact, is for 12-18 months, on the amortization. Those will decline in the short term. Some of the amortization is 7-9 years into the acquisition. We won't see a very significant change in that line item. I think the part around synergy. I think we've spoken about it before, but what we're really doing is very heavily focused on an integrated service offering. How do we take all our capabilities and offerings, both organic and those through our acquisitions to our clients as one TechM offering? I think that's yielding good success for us. Thank you so much. Thank you. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead. Yeah. Hi. Thanks for taking my question. There's just one question from my side. Our margins, again, on margins, but not from a very near-term perspective. My question was more like, our margins have been quite volatile over the past few years. Of course, there's been multiple reasons, acquisitions and all. Last one and a half years, we've had the benefit of travel costs coming down because of COVID and all. This time, at this point of time, we are seeing all the supply side pressures. Just wanted to understand, let's say two or three or four quarters down the line when supposedly as all global companies and everybody's been calling out that the supply side pressures should stabilize, travel should also recover. What is the sustainable level of EBIT margins do you think that we can operate at? Keeping everything else constant, I know it won't happen that way. Let's say if we were to, hypothetically, assume that, okay, these things are stabilized, what is the kind of margin that we can sustainably report, over two to three years period of time post these things settle off? Yeah. You know, I spoke about this year walk, which is, you know, actions on our operating levers that we could be driving. I think it is more tactical right now, relevant right now, right? There's some structural actions that we're trying to drive, right? Which are a little bit more medium term to long term. We have got a specific project plan team, you know, working on those on a specific basis. We've aligned our current measurement criteria and targets also accordingly, right? If you think about it, what I've spoken earlier and which we're working on is a big part of our margin dilutions also, if you look at our geography mix, right? Mm-hmm. When you look at our component of U.S., Europe comparison on the BFSI, we are 10%-15% lower, right, on that component. The margin difference typically in that region versus rest of the world is in the range of 10% differential, right? If we get our mix in line with that comparison, we're talking about anywhere between 1% and 1.5% increase over a longer-term cycle. That's something that will incrementally start playing out every quarter and every year as we move forward in that zone, because it's not a shift that you can dramatically do in one year, right? That's something that we will continue to drive on. Similarly as vertical scale-ups are happening, the BFSI is becoming more towards the billion-dollar mark. Manufacturing is a billion-dollar ops already a big size and scale for us. Similarly, Hi-Tech is growing. There you get operating leverage with the size and scale of that vertical. That's something structurally that's gonna help us. Then, you know, we spoke in the past, we're working also on very tactical area on pruning the portfolio, which is not core to our strategy in this field long term doesn't fit. Those assets and identified portfolios, we're gonna be taking our divestment actions on, which will improve the mix from a margin perspective, right? Those are structural long-term actions while we continue to drive tactically the operating levers each quarter. This will help us, you know, structurally change the nature of the margin profile. In terms of ESN, I think what we said in the 4Q exit will be closer to the 14% EBIT range. As we move forward, we'll continue to drive this action to continuously expand structurally the margin levers. Is 14% the number that I mean, again, not a guidance for, say, for FY 2023 or 2024, but from a long-term perspective, is 14% the EBIT margin number that we would be comfortable in, with in terms of sustainably reporting that? Yeah, yeah, I think that's comfortable with a positive upside to that as we move forward. Got it. Great. Thanks a lot for taking my questions and wish you all the best. Thank you. Thank you. The next question is from the line of Girish Pai from Nirmal Bang Equities. Please go ahead. Thanks for the opportunity. The first question is to Rohit. I recall you saying that pricing is not going to be similar to where we were in the second half of FY 2023. Are you getting any pushback from some of the client conversations you're having on pricing, which is making you a little bit cautious on the pricing action side? That's question number one. Second question is to Manish Vyas, where he talked about a reprioritization of certain client digital transformation programs. What exactly are these clients doing? I mean, what are they deciding to drop now and try and shift that money to what kind of work? Those are two questions I have. Thanks. Yeah, sure. I think from a pricing perspective, you know, we started getting some benefit from Q4 incrementally in Q1, which we outlined in our margin walk. Similarly in Q2, we have a good pipeline of specific customer accounts that we're very clear that the discussions are on a progressive stage of conclusion. Right? Hence that visibility towards Q2. As we move about Q3, Q4, I think because these discussions have been on for a while and, you know, it takes multiple iteration cycles to conclude, that's why this is more certain. As we move forward, maybe the quantum will reduce and also, you know, a lot of discussions which you're hearing globally, in, specifically macro does play a part in terms of, you know, as we talk to the clients about second half. As the scenario unfolds, right, from an opportunity standpoint, if the growth environment, everything, macro, inflation, all that settles down, I think, it'll continue to be an opportunity for us in second half as well. I'm just saying we're factoring from the case that we're making from a margin perspective towards 2Q, 3Q, 4Q. We're not factoring price as a lever in 3Q, 4Q. If it happens, it'll be an upside towards our margin profile. That's the way we're looking at it. You know, I'd like to forward it to Manish for the second part of the question that you have, Girish. Yeah, thank you. Thank you, Rohit. Girish, I just want to be very clear that that answer was in response to only one or two customers, and the perspective around it, not necessarily a macro industry-wide trend. It's not going to be true from region to region or from account to account. However, there are certain things which clearly at this point are gaining lot more prominence in the conversations in terms of where the spend will happen. Number one, there is an increased focus on automation, both from a network standpoint as well as at a broad-based operation. To drive, you know, do lot more with lot less, I think is something that clearly is a big focus. That takes a significant investment at this point, and we are busy with both on the what we call as AIOps as well as AI NOps, which is the network operations automation as well as the IT ops automation. That's one. Two, there is lot of discussions around data centralization and driving data on cloud and integrating data with cloud. That's also gaining lot of prominence. Primary reason being that through that there is a monetization opportunity that the telcos continue to see in the short term and the medium term as well. The third clearly is, there is going to be money spent around network modernization, and I will leave it at that at this point, because it's a trend that will be evolving over the next three to four months, where we will start seeing lot more spend happening in the fiber space, besides of course, the investments in 5G. I guess those are the, you know, some of the areas where you will see a little bit of activity. Okay. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Rohit Anand for closing comments. Yeah, thanks. You know, I'd like, just like to reiterate and recap from a quarter perspective, demand's looking strong. Revenue growth of 3.5%, broad-based between enterprise and comms. We have three units now, billion-dollar run rate. From a deal win perspective, 800+ million-dollar deal wins, which is in the range that we'd articulated. You know, attrition has reduced quarter-over-quarter sequentially by close to 2% based on various interventions we took structurally over the last few quarters. You know, margins down quarter-over-quarter by 220 basis points, but that's the bottom point for us. We have actions that are planned as we move forward between Q2 to Q4 to get it up sequentially every quarter by 100, 150 basis points. The management team is committed to that. From a capital allocation perspective, we'll continue to spend more time this year on M&A integration on the acquisitions we've done and focus on organic growth versus new acquisitions. That's a recap of where we are. Thanks everybody for joining the call today. Good evening. Thank you. Ladies and gentlemen, on behalf of Tech Mahindra Limited, that concludes this conference call. 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