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LTM’s Q4 operating performance was muted. Revenue grew 1.2% QoQ to USD1.2bn (1.2% CC), lower than our expectations. Revenue growth was impacted by pass-on of the accelerated productivity benefits at the top BFSI client, while the remaining verticals delivered a healthy performance. EBITM contracted by 100bps QoQ to 15.1%, a tad below our expectations. Deal wins remained robust, with TCV of USD1.69bn (book-to-bill: ~1.4x), marking the sixth consecutive quarter with order intake exceeding USD1.5bn and providing strong visibility at start-FY27. The management expressed confidence on sustaining growth momentum in FY27 too, supported by strong order intake, robust pipeline, improved exit run-rates, and differentiated AI-led capabilities. It reiterated that while quarterly volatility may occur, the full-year outlook remains positive and that it aspires to double its revenue in the next 5 years as part of the Lakshya ’31 plan. We trim FY27-28E EPS by 0.3-0.5%, factoring in the Q4 results, outlook. We retain ADD with TP of Rs4,700 at 20x Mar-28E EPS.

Results summary

Revenue increased 1.2% QoQ to USD1,222mn (1.2% CC), lower than our expectations of USD1,232mn (2.0% CC). EBITM contracted by ~100bps QoQ to 15.1%, a tad below our estimate of 15.2%. This decline was primarily led by partial wage hikes implemented from 1-Jan and productivity commitments in key accounts, albeit partially offset by forex benefits. The top-5-client revenue declined 5.1% QoQ, while that from the top 6-10 grew 8.2% QoQ. Total headcount was flat QoQ at 87,950. LTM attrition was down by 50bps QoQ to 13.3%. Utilization (ex trainees) stood at 85.7% in Q4 vs 86.9% QoQ. What we like: Broad-based growth excluding the top BFSI client, healthy deal intake. What we do not like: Revenue/EBIT miss, continued weakness in the top 5 clients.

CMT and HLS lead the growth in verticals; Europe leads in geographies

All geographies saw growth, with Europe leading the pack at 5.3% QoQ in USD terms, followed by North America (0.4% QoQ in USD terms) and RoW (0.4%). Growth was led by HLS and Public Services (8.9% QoQ in USD terms), Tech, Media and Comms (8.3%), Consumer business (2.5%), Manufacturing and Resources (0.5%), while BFSI fell 4.9%.

Key trends from the AI-led transition

The management classified the AI opportunity, underpinned by the 3Cs: i) context (domain-tech convergence as the differentiator, given that intelligence is commoditized), ii) cost (focus on TCO of AI adoption), and iii) change management (client readiness for AI-led operating shifts). Contract structures are unchanged for core IT Services (3–5Y terms) and discretionary modernization work. AI-led engagements usually start as project-based and are expected to evolve into longer-term constructs, with FY27 expected to see stronger conversion. LTM indicated that there is no observable trend of early contract renegotiations, although clients are increasingly demanding higher productivity, innovation, and AI infusion within existing contracts.

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