Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Sulabh Govila from Morgan Stanley.

My first question is with respect to the revenue guidance. So, I just wanted to understand how should we think about this guidance panning out across verticals with respect to which verticals would you expect to do the heavy lifting for the year? And which verticals would relatively lag. So, whatever is the current expectation as per the guidance?

Yes. As we talked about, we continue to see momentum from sustainability and aerospace, semiconductors, automotive, and we do expect connectivity to come back to the growth terms during this year as compared to what we have seen in fiscal 24, almost in the same order.

Okay. Understood. And with respect to the quarterly trajectory of this guidance panning out, should we think about this year to be a back -ended growth year with respect to this guidance? Or you think that the growth would be equally panned out across quarters?

Understood. And given that this year is a high single -digit growth year as of now, how should we think about the medium -term guidance that we had provided on the Analyst Day, which is from a 3 - to 5-year perspective? Does that also undergo a change or that remains intact as of now?

No, we do feel that I think based on what we heard from our top 40 customers, and they are going through their own challenges, and they do see this is going to be a potential growth segment as we've envisaged earlier. I do feel that our medium - to long-term growth prospects are absolutely intact. And we do expect with demographic changes that are seen in Europe and this is going to be a great opportunity for a company like us, having invested in the last 2 years with a lot of capabilities in Europe. And we've started doubling down in Japan. And as we talked about our entry into Middle East, and some of these areas will continue to see momentum. And when we talked about energy transition, we will expect while there is significant investment growing from Europe and the U.S., we do feel that Middle East could be another potential growth opportunity that we are planning to invest on. So, we do see that for the medium to long term, the growth aspects are absolutely intact.

Understood. And then last on margins. I just wanted to understand what are the areas of investments for growth that we called out in our opening remarks, which we will be investing from incremental margins that we get this year?

Sulabh, I'll take this question. As in relation to what Karthik said about your earlier question on the medium-term trajectory. In our view, the underlying drivers for the ER&D space remain very much intact. Whether it is ER&D spend growing year-on-year, if the addressable market growing year -on-year, the partnership propensity increasing year -on-year or the technology evolution driving the pace of ER&D acceleration. Those underlying drivers and therefore the medium-term trajectory we see completely remains intact as we have previously spoken. Within that, the investments that we have made in the past in the technology space to accelerate the margin and revenue trajectory is where we will continue to invest in FY25. We're talking basically or ganic investment in technology that will accelerate our revenue growth and the margin trajectory. And this is what we've showcased also during the Investor Day as a part of the experience center visit that we have demonstrated.

The next question is from the line of Kawaljeet Saluja from Kotak Securities.

My question is for Karthik. Karthik, the back-ended guidance never works for the industry, the environment is challenging. You have missed your guidance perhaps possibly in three of the last four quarters. I mean, what gives you the comfort of going out and giving such a guidance which is back-ended all over again?

Kawaljeet, I think we also see that many of the conservations that we have with our customers, and they do see some of the deferrals that are happening or getting started, which happened from Q2 to Q3 in Q4 and some of the d eferrals that they are asking us to move through Q1, Q2, we hope some of them will still materialize. We do see that it becomes too difficult to start getting the specific quarter guidance right because of the kind of challenges that we have seen from projects getting moved to the right and getting pulled back. But we do see that the trajectory for the next year will definitely be a growth year and based on the momentum that we have seen in few of the segments and the lack of it from other segments.

Karthik, correct me if I'm wrong, but I thought that normally in this industry, your normally -- visibility is the highest for the immediate quarter and the visibility reduces as you progress through the course of the year. What you're indicating is possib ly quarterly trajectory, which is uncertain. So, if quarterly trajectory is uncertain, how does one give an annual guidance here?

Yes. I think this is definitely a challenge that we have deliberated internally with our teams, Kawaljeet, and what we believe is something that we'll have to work towards during the first half of this year to ensure that we are able to define it as we move forward. And that's the reason why we want to keep it at a broad level instead of a specific number.

Okay. And what are the underlying assumptions that you have made? Given your experience on the guidance last year, what are the underlying assumptions and fine-tuning that you have done to ensure that you'll end up with a better outcome on your guidance this year related to last year?

Sorry, Kawaljeet, before Karthik answers, that I just want to also say that what you addressed is very right. I mean, how do we get to that number and that guidance. And the Board also had those questions. And therefore, we did quite a bit of a deep dive internally to look at how the buildup happens. Because what can happen in Q4, really, nobody really knows, but then there are a certain set of assumptions. And we got to the second degree of those assumptions to say what are the orders that we need to win, what is the probability. And therefore, can we come up, can we commit to a number. Of course, it's a bit of a range. but can we commit to a number based on the buildup. So, I think your question is very valid. And also, I just want to highlight that the Board also shared that concern at the budget point and therefore, we went into quite a bit of deep dive both with the management team and then presented the summary to the Board to say how does it add up. Because, of course, to your point, there's absolutely no 100% confidence in this industry or for that matter any industry, but the confidence comes from the fact that we've done a bottom - up rather than just an aspirational top down. I just wanted to leave it at that because I thought that was a good question, but since we also had it and we addressed it.

That's fair. I just wanted to get -- I mean, where in the assumptions that you have made this year and given your experience last year, how is the process of guidance and the underlying assumption is different there? Sorry Karthik, I interrupted you, go ahead, yes.

Kawaljeet, I'll just add to what Krishna said. So, if you look at last 12 months, where did we miss our forecast versus the initial guidance. But essentially, we did not anticipate the drop in Connectivity and Rail. I think those are the 2 surprises that we saw during the year. And that's one of the key i nputs that we have taken into account when we really wanted to plan for fiscal 25. And again, we tried to map out based on order backlog, order intake, the pattern of what customers do. But I think it's the best estimate at this point of time is where we have arrived at.

Kawaljeet, if I may step in. Firstly, thank you for the candid question. I'll just add a few notes from my end to what Krishna and Karthik also mentioned. To your question on Q1, there are 2 things that we are going to watch out, the flattishness of Aerospace in Q4 was essentially because we won a lot of new business, lot of new contracts. Now the supply that we are building has to catch up with the demand that we have raised. And that will take for us at least 1 more quarter before we see how this transfers for us to translate to revenue. Similarly, all the contracts we won in the end of Q4 for communication, we have to execute them in Q1 and to realize what is the growth that we can see in Q1 compared to Q4. Those are the variables as we're concerned for Q1. But if you take a step back and the good question you had on the full year guidance, there are 3 things in our mind. Firstly, if you see the order book we had for FY24 is fairly strong. We closed FY24 with the order intake, which is 15% above the previous year. The order book grew by 15% year-on-year. That's a positive time as the one might say. But that said, you also rightly pointed out a key learning there in FY24 is the degree of macro uncertainty that we are handling. When you combine that with the 2 topics I mentioned before about Aero supply catch-up and Comms watch for Q1, that's the second thing I'd like to say. And therefore, thirdly, we've taken a cautious and pragmatic approach for the outlook, and we will go through this for Q1 and will come back at the end of Q2 and make an update to the trajectory as we see things progress.

Yes. On that Prabhakar, is the book -to-bill ratio different or basically the ACV number of the order book different in FY24 relative to the last year. So, when you're saying 15% growth in order book, is it really like-to-like? Or is there a change in the tenure of the deals that you have signed in FY24?

Okay. This number is like -to-like, Kawaljeet. An interesting development that we see, and Karthik talked about spend being moved around in the quarter. We see a propensity of customers cutting smaller PO’s for shorter term as compared to longer PO’s for a longer term. So therefore, in a way if you were to look at it from a pragmatic perspective in a way, the order book we have in hand should be more executable in the short term than in the previous year. But that's it, I also go back on earl ier comment on the degree of macro uncertainty which can move things a bit around. Therefore, the cautious pragmatism. So, the answer to your question is like -to-like but we see much more shorter-term PO’s right now compared to the past.

The next question is from the line of Mohit Jain from Anand Rathi.

Sir, just one question on Transportation, like we were hoping for some growth in 4Q. So, what happened here and why the 6 months of flattishness in that particular vertical, while we have won few large deals.

I think this is -- again, we still have not hit the bottom on rail. I think that is still the challenge that we are dealing with when we talk about transport, and we do continue to see the momentum as far as Aerospace is concerned and also add to what Prab hakar mentioned, we've seen seven consecutive quarters of growth in Aerospace. There is definitely a breather and we do hope this starts getting back to the growth trajectory in the latter part.

So now for transportation, we are building in Q4, Q1, Q2 more or less range bound and then look at it from a third quarter standpoint?

We are not saying specific on how the Q1, Q2 will pan out, and we do see there could be continuous growth. There are 2-3 issues that I want to highlight that the Aerospace industry is. What we have seen from 2019, I think the demand for air travel has come back and the customer's ability to cope up with in terms of manufactur ing components and products as well as the regulatory to service. I think there is a huge demand that's piling up. And the supply chain issues have not been fully rationalized while maybe I would say, 85-90% of the issues have settled, but there are still issues on the supply chain and constraints on them to produce is more than the demand side and which is definitely good news. So, we do expect the growth will be led by manufacturing, engineering and aftermarket and we've talked about one of the large deals, which is won on the digital aftermarket side. So, we do expect the aftermarket MRO growth is robust for a few more years, and manufacturing has to cope up. If go to most of the aerospace customers today, the biggest challenge is they have more orders than what can they fulfil it. Still look for solutions to improve the productivity, their ability to digitize the existing process and ability to get better visibility on supply chains. I think those issues are still hitting them and they need help in all those areas.

And 4Q decline is purely on the Rail side?

Yes.

Okay. Last is on order backlog. We had this Y -o-Y decline despite signing these 2 orders. So why would we have a Y-o-Y decline in order intake?

Yes. The order intake is a confirmed purchase order. And when we talk about large deals, they are total contract potential, all of them have to get converted into purchase orders. They will get converted in the due course of the year end.

I was referring to the like -to-like Y-o-Y number that is given minus 6 for 4Q 2024 on order intake.

Yes. So, I think Q4, like what Prabhakar said, interestingly, when we looked at Q4 of fiscal 23, we saw at least about 5 deals of about $40 million, which may be beyond 12 -18 months, 24 months TCP. The customers were willing to give their purchase order and the customers are cutting short in terms of the POs in Q4 of fiscal '24, which is an interesting observation that we saw. And we hope this is only an aberration and it se ems to get corrected as we move into the year.

And the two deals that you have announced, TCV is already included in 4Q number?

Not, yes. Let me put it this way. The order intake of INR227 million we are talking about, they do not include the TCP of INR197 million we have reported as part of the large deals. Some part of this INR197 million of large deal, if it would have come as a purchase order could be included in that.

Look at it as a change in portfolio, right? Because the growth is coming from varying locations. So we also have to look at it in the conjunction that there is a change in our portfolio, I think like-for-like, because some of the acquisitions are going quite well, and that it was a sort of deliberate choice to go down the path of acquiring because those were the growth areas that will make up to some of the softness that we're seeing in other areas, like Rail or Communication. So, I think you've to see it in that conjunction and the fact that it's gone up 7.1% year-on-year is a good sign.

The next question is from the line of Vibhor Singhal from Nuvama Equity.

Sir, just a couple of clarifications from my side. Just -- I couldn't really get the math of this deal flow that you mentioned. So, in the quarterly deal flow, so you're saying part of the INR197 million is included and part is not included?

So Vibhor, this INR197 million is the total contract potential that we signed as large deals for Q4 fiscal 24. Out of that, part of the purchase orders that we would have received is included in the order intake number.

Okay. And if this would be a recurring in the sense you've included that in the purchase order I mean, in the deal flow for this number?

Sorry, maybe about, I would say, roughly about INR30 million would have been included in the order intake and the remaining INR160 million would be delivered as part of the purchase order.

Whatever the period of the deal is?

Yes.

Got that. And also, just coming to a little bit more on the Transport division, both Aero and Rail. In Aero, you mentioned that you're expecting a good demand from air travel coming back and supply chain issues also not having rationalized. So, in nutshell, do we expect Aero to be a growth vertical in FY25. I'm not looking for a number, but just the direction. And similarly, in terms of the Rail, has the issues with the top client been sorted or when do we expect that Railways vertical could actually bottom out and we could see that going into the green again.

We continue to hold the view that Aerospace should be a growth engine for us even in fiscal 25. And we also expect hopefully that Rail bottoms out sometime in this year and lot of order book that is built in by the customers is definitely being taken into account. And we also feel it's a matter of time that they start engaging with executing on them. I also want to call out one of the aspects that we have heard from many of our customers over the last 2 years, especially with the political and geopolitical uncertainty, a lot of money that is getting moved towards defense to ensure that the security is being the priority as compared to infrastructure. I think some of t hat should probably ease out maybe later part of this year and hopefully that should start getting us some growth. But having said that, we have also seen most of the rail degrowth is also led by what we have seen is offshoring. And most of the on-site work has moved to offshore. And that is one of the reasons where we have seen that drop in the revenue volumes.

Got it. Just maybe one bit more on the rail segment, again. Net on -- I mean, excluding the top two clients which merge together and which are basically responsible for the large part of the degrowth, the remaining vertical, is that growing? Or is that also seeing challenges from the on- site to offshore transfer that we are seeing.

So, there is definitely a significant money that needs to be spent in terms of credit signalling in Europe. I think that's going to be a massive investment that is coming up. Only issue is it is not clearly defined yet, when is it likely to start, when is it likely to end. And some of the infrastructure that we heard from customers are 30 to 40 plus years old, and they definitely need modernization and maintaining uptime and making sure they're able t o deliver on -time performance has taken a hit. And this probably should get fixed in the next few years for sure. And we will see some of this growth coming back maybe in the next few quarters as we anticipate.

The next question is from the line of Vihang Subramanian from Zaaba Capital.

So, I think our constant guidance has previously been 10% to 20%. And I think recently, you confidently even said that it wouldn't be below 10% for the next few years. So, I'm just trying to understand what has really changed here in 4 weeks? And which segment has led to this change in view?

No I think we've talked about -- we have seen maybe 20 -25 customers in the last 3 -4 months that we have engaged have kept moving things around in terms of how they really want to prioritize certain projects compared to the list of projects we are supporting them and moving some of the projects to the right, or cancelling a few of them. And I think this is part of the portfolio that we are trying to prioritize. We can understand where they come from and some of our customers, the top 40 customers that we work with, we have seen that they reduced their guidance for the next 12 months, given the macro uncertainty they are likely to face . That is another leading indicator, which gives us the view saying that while they do see growth coming probably in the next financial year and some of the issues around -- uncertainties around the elections and -- plus some of the interest rate reduction, that is expected at this time this year, I think they were trying to really time it maybe later part of this year on some of the investment plans. So, I think those are the indications that we have from our customers, and that's the basis on which we are trying to look at. I think the same question was asked by the Board to Krishna. How do you make sure that we still keep our medium to long -term growth intact? And we still hope that we should get back into that range. And I think what we have seen in the last 3 to 6 months is definitely something that we have not seen in the last 2-2.5 years. So, it is definitely a surprise for us, and we do hope things get better as we start getting in.

Let me also add to that, Subramanian, thank you for the question. I'll just say three things. If we dive back to the commentary we've been making. Our view was that and remains that the four themes that we have picked up, transportation, sustainability, connectivity to new growth areas that is seen, have the potential to grow double digit over a period of 3 to 5 years. And that still remains very strong in terms of the potential that we see and the indicators that we see. The second thing we also cited that an annual number, to extract from these multiple themes an annual number will be in the context today in which we operate, which is where we currently are. The third thing I would say, at the expense of repeating what I mentioned call earlier, my apologies for that, is that order book for us is very strong for FY24. But at the same time, we have learnings from FY24 in terms of the degree of macro uncertainty and we also have to watch Aerospace and communications for Q1. And therefore, we're taking a cautious and pragmatic approach as we currently guide revenue for FY25. And as we execute thro ugh Q1 and Q2, we will come back at the end of Q2 and make an update as we see it appropriate contextually for the current year. So, in summary to your first question, we are extremely bullish on the four themes that we have picked up in the medium term in terms of what we see around, what we hear and what we're also seeing in the order book.

Understood. And just a follow-up on that. I think the two large deals, which you mentioned, is that included in the guidance?

Part of it is included in that and how it ramps up, we will probably evolve as the program ramps up.

The degree where we had the order intake available is baked in, Subramanian. To the degree where the order is still not part of the TCP that is not baked in. To Karthik's earlier clarification, we won a number of large deals in Q4. Some of them have also come with purchase orders. So, the degree we have a PO we have baked into the options. Where we don't have a PO, we haven't baked in the options.

Given this kind of macro uncertainty, I don't really understand why are we even guiding for something in the range of like 20% and so on, right? Like I mean, I think 10% was supposed to be floor that we had previously guided to the Street, right? And now it seems like the floor is out of the picture, right? So just to add to that, the last question I have is if you have done 2% this quarter, what gives you the confidence of even achieving high single-digit here?

So, I'll take that, Subramanian. I think you are referring to the guidance that was provided in April of 2023, which was updated at the end of the calendar year, that is the first thing. The second thing is our confidence comes from 2 things, I'd say. So, the degree that we can have a confidence in the world we are living today, our confidence comes from 2 things. One is a strong order book, especially the key wins we had in Q4 for Aerospace, which is a growing sector for us. And the second thing is we area also present in all the right segments, which are poised for growth in the medium and long term. The 4 segments I spoke about before. These 2 are the elements on which our current view of the FY25 outlook is based on.

And I think if I also may add to that the outlook is really based on what we see as at the point in time, right? Because we also had a lot of debates around give guidance or not and unfortunately, there was too many different schools of thoughts. And again , we're trying to give you a view and say, more than a guidance, it's the view of how we see the world right now. I mean that we're happy to be transparent to that degree to say that's what we see in the world right now or that's what we see in our customer world right now. So again, if you look at the medium to long term that Prabhakar talked about, we are just as confident in our business as we were 12 months ago or 24 months ago. But the reality of how the purchase orders come, when it comes, how it comes change, so if I -- again, it might not help with the immediate case, but I'd say if I were to venture again and say, over a 5 -year period, would we deliver that double -digit number? Absolutely. There's no doubt in my mind that we will. It is just the nature of the business where you are going to have ups and downs. So, we're just trying to give you a view of what we see at a point in time. And of course, we expect that you will use your judgment on top of it, because this is what we see at this point in time.

Sir, can you just quantify or break the growth between organic and inorganic for 24 as a whole. That is first. And second, to Prabhakar when you mentioned that we'll revisit investments, are we referring to M&A at this point in time.

Abhishek, to your second question first. No, we're not referring to investments and M&A. We're talking about organic investments we make in technology that will accelerate the reven ue and the margin trajectory we find. So, this is all organic, the first thing.

My first question regarding the growth, if you can break that between organic and the inorganic component.

So, in this case, I have to say, very fortunately, the integration of all the entities that we acquired is completely complete. That well integrated part is Cyient ecosystem. Even for FY24, a number of deals that we won were together, both in terms of order intake and revenue. So, we don't have nor we should actually have any separate view of organic versus inorganic component, integration is complete. And if we have them, I personally believe as a finance person, we haven't achieved the objective of the acquisition. So, I would like to see it also as much as anybody else. But fortunately, for us, it is all well integrated and we're operating as one machine right now.

Next question is from the line of Nitin Sharma from MC Pro Research.

First of all, there seems to be some client loss since 3Q in a $1 million and $5 million bucket. Which vertical this belongs to?

I think we have looked at this data, I think there are about -- it's more of a seasonal variation we look at from the last 12 months, and there are a few customers who fell to 900k -plus bucket and that's the reason why you're seeing the drop. And some of the other buckets have moved from one to another. So that's a shift that you'll see there.

Can you please explain what led to decline in the headcount in Q4? And for how one should see it in FY25 in terms of headcount addition?

Yes. So, I think we also looked at based on where the demand is, and we are trying to bring i n as close to th e agile ramp up as possible. Also, some of the attrition that we did not replace in Q4 and is the reason why you see headcount reduction and also, we have completed our performance management process as of Jan. And we also have taken some action on poor performers. I think all this added up to what you see as a negative headcount. We do expect that we should start really getting into the growth trajectory during FY25.

The next question is from the line of Bhavik Mehta from JP Morgan.

Just one question going back to the guidance. I think Prabhakar, you said that you're taking a cautious view on the high single -digit guidance what you have provided right now. But I just want to understand what are the risks that this high single-digit goes to the mid-single digit over the next 3 to 6 months. So, what are the verticals that you see things don't play out as per your expectations currently?

Bhavik, thank you for the question. Yes, you're right. We are being very cautious and pragmatic about the business learning we had in FY24 as we provide the outlook for FY25. We would like to watch out for Q1 in terms of how these 2 segments we have, basically Aerospace in terms of the supply catching up with demand and connectivity in terms of translating orders wins we had in Q4 into revenue in Q1. I think then we will be able to look at a much more clearer picture for the full year. Those 2 are the variables that we are tracking right now, the two important variables.

The next question is from the line of Suraj Malu from Catamaran.

Sir, I just wanted to understand when you mentioned like-for-like degrowth in the order intake. Can you just help me understand what do you mean by like for like?

Yes. Suraj, when we looked at Q4 of fiscal '23, we have not established a clear system of the order intake from the acquired entity, and that was still coming in based on revenue equal to order intake versus some of the assumption that was made. So, when we were to really neutralize for it. I think that's where we kind of came up with this like-to-like model. It is still an estimate, but we do feel that as we start rolling through this year, we'll have a better view of a single number, which is integrated with acquisition as well as the organic part.

Ladies and gentlemen, that was the last question for the question -and-answer session today. I would now like to hand the conference over to Mr. Krishna Bodanapu for closing comments.

Thank you very much. Thank you, everyone, for your time and being on the call. While Q4 was a tad bit lower than what we expected, as we explained, we're quite confident on what the financial year holds for us. We take your feedback on the ask ahead of us and how we also provide the view going forward, which, of course, we will be incorporating that. But thank you very much for the support. Thank you very much for the questions. Of course, if there's anything else, please do reach out to Mayur or Vish and we can provide an answer. But with that, thank you very much. Have a good day and thank you for the support.

Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no responsibility of such errors, although an effort has been made to ensure high level of accuracy.