LTM reports muted performance in Q1, brokerages on price targets and stock outlook

LTM (formerly LTIMindtree) posted a muted performance for the quarter ended June 30, with consolidated net profit rising 16.9% year-on-year to Rs 1,466.3 crore, according to its regulatory filing. The company reported a profit of Rs 1,254.1 crore in the corresponding quarter last year, while profit stood at Rs 1,387.3 crore in the January-March quarter.

Revenue from operations rose 17.9% year-on-year to Rs 11,608 crore during the June quarter, compared with Rs 9,840.6 crore a year ago. On a sequential basis, revenue also edged higher from Rs 11,291.7 crore reported in the preceding quarter.

The company's operating margin improved to 15.5% in the first quarter, expanding by 120 basis points from the year-ago period and 40 basis points compared with the March quarter, reflecting better operational efficiency.

LTM reported healthy deal momentum during the quarter, with order inflows reaching approximately $1.68 billion, up 3.1% from a year earlier. Its trailing 12-month order book stood at $6.65 billion, supported by growing demand for the company's artificial intelligence-led offerings and digital transformation services.

Brokerage Nuvama maintained a buy call on the stock after the Q1 show which it termed as weak.

"Weak start to FY27 raises ask rate; maintain ‘BUY’. Soft results in Q1FY27 have raised the ask-rate for LTM to meet its guidance of higher growth in FY27 over FY26 (+5.3% CC YoY) — a tall ask in our opinion. Post the sharp correction (-33% CYTD), LTM is trading at 19x FY27 PE — a premium to largecap, but discount to midcaps. We expect these valuations to sustain," said Nuvama.    

LTM continued to improve profitability in the June quarter, with its EBIT margin rising 40 basis points sequentially to 15.5%. The expansion was supported by foreign exchange gains and ongoing cost optimisation initiatives under its FitforFuture and New Horizon programmes, which helped offset the impact of annual wage hikes.

The company continued to strengthen its talent pipeline by hiring around 1,300 fresh graduates during the first quarter. It expects to onboard more than 6,000 freshers over the course of FY27 as it builds an AI-ready workforce. Management indicated that its employee pyramid is gradually evolving into a more diamond-shaped structure, reflecting a greater mix of experienced and specialised talent.

LTM's artificial intelligence business continued to gain traction, with AI-related revenue reaching an annualised quarterly run rate of nearly $150 million.

Client spending also showed signs of improvement, with the company's largest accounts delivering healthy growth. Revenue from the top five clients increased 4.5% quarter-on-quarter in constant currency terms, while the top 10 clients recorded 4.3% constant currency growth.

Meanwhile, LTM said it is awaiting regulatory clearances for the acquisition of the IT business of Randstad. The transaction is expected to be completed during the third quarter of FY27, subject to the necessary approvals.

Brokerage Motilal Oswal assigned a 21% upside and maintained BUY with a target price of Rs 4,900 (valuing at 21x FY28E EPS).

MOSL said Larsen & Toubro Technology Services (LTM) has expressed confidence that its revenue growth in FY27 will surpass FY26, a guidance that, if achieved, would position the company among the fastest-growing players within India's top six IT services firms.

The optimistic outlook comes after the company completed a challenging phase of accelerating productivity-related pricing adjustments across several of its key banking, financial services (BFS) and high-tech client engagements.

Having already absorbed the impact of these productivity pass-throughs, LTM appears better placed than many of its peers to benefit from improved execution and stronger deal momentum in FY27. This could provide the company with a relative competitive edge as the broader IT services industry continues to navigate pricing pressure and AI-led transformation.