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Steady Growth, Strong Pipeline Underpins Outlook

LTM delivered a modest Q4 performance, with INR revenues being supported by FX tailwinds. Profitability and margin saw sequential pressure due to seasonality impact, whereas deal momentum remained key positive with sustained large deal wins, providing strong revenue visibility. While certain verticals such as BFSI and manufacturing saw softness, growth was led by HLS and TMT. The management remains cautiously optimistic, expecting growth to be driven by deal ramp-ups, with margin stabilizing, gradually supported by synergies and continued investments in AI and digital capability. Accordingly, we revise our target price to INR 4,700 (earlier INR 5,920); and downgrade the rating to ‘ADD’ (earlier ‘BUY’), valuing the stock at 20x FY28E EPS of INR 235.

Q4FY26 Delivers Modest Growth with Sequential Margin Pressure

* LTM reported Q4FY26 revenues at USD 1,222 Mn, up 1.2% QoQ (vs CIE estimate of 1.5% QoQ growth) both, in reported as well as in CC terms. The INR revenue for Q4FY26 stood at INR 112.9 Bn, up 4.7% QoQ and 15.6% YoY (vs CIE estimate of 3.9% QoQ growth). For the full year, USD revenue stood at USD 4,764 Mn, up 6.0% YoY and 5.3% in YoY CC terms. In INR terms, revenue grew by 11.3% YoY at INR 423 Bn.

* EBIT for the quarter came in at INR 17 Bn, down 1.6% QoQ (vs CIE estimate of -2% QoQ). EBIT margin for the quarter came in at 15.1% a decline of 97 bps QoQ (vs CIE estimate of 15.2%). For the full year, EBIT came in at INR 65 Bn, up 18.1% YoY, while margin stood at 15.4%, up 90 bps YoY.

* PAT for the quarter came in at INR 13.9 Bn, up 43.1% QoQ and up 23.4% YoY (vs CIE estimate of 6.4% QoQ growth). Full year PAT was reported at INR 50.2 Bn, up 9.1% YoY which includes one-off items.

Sustained Order Inflows Drive Growth Visibility

LTM reported total order inflow of USD 6.6 Bn, (+10.3%), featuring six deals valued at over USD 100 Mn each, this year. Q4 marked the sixth consecutive quarter where order inflows exceeded USD 1.5 Bn, closing at USD 1.7 Bn. Of the six USD 100 Mn+ deals, those announced in the first half of FY26 (up to early Q3) have completed or are finishing their transition phases. Vertical-wise, on a sequential basis, growth was led by HLS & Public Services (8.9%) and Tech, Media & Communications (8.3%), followed by Consumer (2.5%). BFSI (4.9%) & Manufacturing (0.5%) faced some pressure. The deal pipeline remains strong and diversified, with increasing participation in multi-year, large-scale engagements, providing good revenue visibility into FY27. Continued traction in digital transformation, cloud and data-led programs remains a key drive

Near-term Margin Pressure, Recovery Backed by Synergies

EBIT margin for Q4FY26 stood at 15.1%, declining ~97 bps QoQ, affected by seasonal factors, cost-normalisation and wage hike. However, for FY26, EBIT increased 18.1% YoY to INR 65 Bn, with margin expanding 90 bps YoY to 15.4%, supported by operational efficiency, integration synergies and improved utilisation. The company continues to invest in AI-led capabilities, automation and platform-based delivery models. The management remains cautiously optimistic for FY27, anticipating growth to be driven by strong deal rampups. Margins are expected to stabilise and gradually improve supported by synergy benefits and operational levers.

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