IT services firm LTM’s June quarter (Q1FY27) result was a mixed bag: muted revenue growth, range-bound deal wins, but better-than-expected margin. The stock was flat in early session on Monday. Sequential constant currency (CC) revenue rose a mere 0.3% due to the delayed ramp-up of PAN card 2.0 deal in India and war-related disruptions.
Vertical-wise, revenue improvement was led by technology & services (3.4% sequential CC growth), followed by financial services (3.2% sequential CC growth), which rebounded after several weak quarters. Consumer and production segments were sore points. LTM saw sequential growth across client buckets, with CC revenue from top five and top ten clients rising 4.5% and 4.3%, respectively.
LTM is confident of revenue acceleration Q2FY27 onward, continuing through the year with margin expansion, aided by a robust order book, the completion of top-client transitions, and AI proof points. LTM’s AI revenue reached a quarterly run-rate of around $150 million. LTM has invested in enterprise AI firm Uniphore and launched new AI products.
Near-term revenue growth will be organic as Randstad acquisition is expected to close only in or after Q3FY27. LTM expects FY27 revenue growth to be better than FY26. But Nuvama Research said weak Q1FY27 results have raised the ask-rate for LTM to meet its guidance of higher growth in FY27 over FY26 (+5.3% CC y-o-y), which seems to be tall ask.
LTM reiterated doubling revenues goal by FY31 under project Lakshya. But double-digit growth needed to double revenues over the next five years is hard to achieve if the order book remains remain stagnant, said Nirmal Bang Institutional Securities. Total contract value (TCV) of deal wins at $1.68 billion, including two large deal wins, was flat sequentially and up 3% on year.
Earnings before interest and tax (Ebit) margin expanded 40 basis points sequentially to 15.5% in Q1FY27, helped by currency benefits and operational efficiencies from the New Horizon program that offset adverse impact from annual wage hikes. LTM expects FY27 Ebit margin to be higher than 15.4% in FY26; it believes that Randstad acquisition will not impact margins much.
LTM stock fell 32% so far in 2026 against Nifty IT index's 26% decline. It is trading at FY28 price-to-earnings multiple of around 18, as per Bloomberg, which is far from comforting.