Firstly the growth rate moderated quite a bit in Q4. Is it a one off case or there are any other factors playing in over there?
As we have indicated in our commentary yesterday the primary reason why we did see a little slower growth in this quarter is because the ramp up has been a little slow for many of the deals. I think there has been a delayed start that is on the back of cautious decision making in many of the client scenarios.
Especially in BFS, we have seen a few clients getting into a hiring freeze. So those are primarily the reasons why we did not see the ramp up that we expected earlier but at the same time, our pipeline is very strong.
We are in the final stages of closing quite a few large opportunities. So we are very optimistic about the future as we go along.
If you look at the overall FY23 growth was about 20%. If you could tell us what sort of a growth outlook do you have for the current financial year that we are in, that is FY24?
Well at this point of time, as we said, even if I look at many of the large deals that we have closed and we are in the process of closing, it has kind of shifted from transformation to cost takeout or efficiency play.
And given that scenario, there will be a significant amount of transition that will happen in Q1 and which also means that we will have a slow start to the year as far as Q1 is concerned.
But seeing the pipeline that we have, the deal activity that we have, we even have a very strong order book as well. So all these things give us the confidence that in spite of a slow start in the next year, we will be definitely getting into a double digit growth as far as FY24 is concerned. If we talk about your margins now, so on a sequential basis though there has been some improvement but just a year back your margins were near around 18%. So by when do you feel your margins can once again be in that 17 to 18% of range?
As we have said, we had to take a lot of one-time cost as far as the Q3 and Q4 are concerned, and especially Q3. And there was an integration effort going on and it was a substantial effort but the team did a phenomenal job in closing out everything. And as of 1st of April this year, we are working on one system, one process.
So the synergies in terms of margin will start kicking in. And our expectation is that we will aim to get to the 17 to 18% EBIT this year. So we are very focused on margin, and we have always said that we believe in profitable growth and that story should remain intact.
Your BFSI segment forms a large part of the revenue. Do you expect to see some slowdown or rather further slowdown in the fiscal year that we are in?
Well, we all watch the marketplace but it is also a reflection of the portfolio of clients that you have within your BFS. So apart from the fact that we had a few situations where clients went for a freeze which we are expecting that by end of Q1, it should all clear up, we are still optimistic on BFSI.
What about the other verticals? What is the outlook for retail and the other verticals?
Well, I mean the growth that you see in FY23 has been broad-based. We are in certain verticals and we will continue to remain on those verticals. There may be additions in terms of service line capabilities that we will focus on but our objective is to grow all the verticals broad-based across the globe.
Let us actually get an analysis of what is happening on ground if you could tell us, how is the deal momentum right now? And are you seeing any delay in decision-making given the fact what is happening globally?
Well from a deal activity standpoint, we are very confident about the closures that will happen in Q1 as well as we go along. There is tremendous amount of deal activity that is number one. Number two is, the deals are more efficiency-oriented rather than transformation-oriented that is a shift that has happened from last year to this year and which is normal because clients have become very cautious and they want to preserve the cash. But at the same time, the good news is that if you are talking about cost-takeout deals, they tend to be longer term, which also gives a steady revenue in the longer term.
The only flip side is some of these deals will take a little bit of time to ramp up. And of course, the decision-making has been a little slow which is also not helping because the ramp up is kind of delayed. So apart from that, I do not think we are worried about the overall scenario as far as the portfolio of clients that we have.
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