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H2 Growth Visibility Improves; Margin Sustains Mid-16%

LTTS delivered a strong Q2FY27, with 2.7% QoQ CC revenue growth and 60 bps QoQ EBITM expansion to 16.3%, achieving its mid-16% margin aspiration two quarters early. Sustainability remained the key growth driver, expanding 4.9% QoQ and 13.4% YoY, contributing ~38% revenue, driven by large-deal ramp-ups across data centres, energy transition, robotics and AI-led automation. Mobility also sustained growth, while Tech remained muted, with a large AI-led telecom engagement starting to ramp-up. Large-deal TCV stood at USD 203 Mn, with >50% AI-led, providing better H2 revenue visibility. The management expects stronger H2FY27 revenue growth, driven by large-deal ramp-ups, a healthy pipeline and improving regional opportunities, with H2 performance expected to surpass H1. Importantly, the management expects margin to sustain mid-16% levels despite a 50–80 bps impact from Q3 wage hike, offset by favourable segment mix, AI-led productivity, operational efficiency and SG&A discipline. Sustainability remains the structural growth driver, with Mobility upside from Aerospace, Rail and North America Auto. European Auto recovery is expected next year, supported by large deals, while Tech may remain soft in Q3 following the scheduled Medtech program ramp-down, with the next phase expected in H2.

We remain constructive on LTTS medium-term positioning and marginally raise FY27E/FY28E revenue and EPS estimate by 2–3%, reflecting strongerthan-expected Q2 execution, better H2 growth visibility and sustained mid16% margin. We raise our TP, from INR 3,700 to INR 3,850, valuing LTTS at 22x average FY28E–FY29E EPS and retain our ‘ADD’ rating.

Revenue in-line; Margin Beat; TCV Continues to Impress

*Revenue for Q2FY27 stood at USD 317 Mn, up 2.3% QoQ and 3.3% YoY (vs CIE est. of USD 315 Mn). In INR terms, revenues came in at INR 30.4 Bn, up 3.4% QoQ and up 12.1% YoY (vs CIE est. of INR 30.0 Bn)

* EBIT for Q2FY27 came in at INR 4.9 Bn, up 7.6% QoQ and 29.8% YoY (vs CIE est. of INR 4.7 Bn). EBITM was up 60 bps QoQ and 220 bps YoY to 16.3% (vs CIE est. of 15.8%)

* PAT for Q2FY27 stood at INR 5.5 Bn, up 53.7% QoQ and 66.8% YoY (vs CIE est. of INR 5.3 Bn), driven by a one-time gain of INR 1,650 Mn from the disinvestment of the SWC business

Growth Momentum Improves; AI-led Wins Strengthen Visibility:

LTTS reported 4.8% YoY revenue growth in CC terms, led by Sustainability (+13.4%) and Mobility (+4.7%), while Tech declined 8.5%. Large-deal TCV exceeded USD 200 Mn, with over 50% AI-led, while annualised EI-led revenue reached USD 120 Mn. The management expects stronger H2 momentum and reiterated its FY26– 31 aspiration of 13–15% USD revenue CAGR, largely organic with tuck-in acquisitions. We anticipate growth to accelerate gradually, supported by deal conversions and EI traction.

Margin Expands; Mid-16% Target Achieved Early:

EBITM expanded 60 bps QoQ to 16.3%, achieving the mid-16% aspiration ahead of schedule, supported by a favourable mix and operational efficiency. The management expects margin to remain around mid-16% despite a 50–80 bps Q3 wage hike impact, reiterating its FY26–31 EBITM aspiration of 16–17%. We expect AI-led productivity, improving mix and operational efficiency to offset wage inflation and sustain margin.

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