Add LTM Ltd for the Target Rs 4,700 by Emkay Global Financial Services Ltd
We attended LTM’s Investor Day, where the management outlined its 5Y ‘Lakshya 2031’ strategy, anchored on repositioning the company from a traditional tech services provider to an AI-led ‘Business Creativity Partner’ operating at the intersection of domain expertise and tech convergence.
Key takeaways:
1) LTM targets ~2x revenue by FY31, implying a CAGR of ~15% (15-17% contribution from M&As) with ~200bps EBITM expansion. It expects revenue growth to be broadly consistent throughout this period, barring lumpy M&As.
2) The management expects AI to reduce the traditional USD1.3trn tech services market by USD0.3tn, though this is more than offset by ~USD0.5trn from platformized IT services and USD0.8trn from new business AI and AI-led engineering, expanding TAM to USD2.3trn.
3) LTM expects its 360-degree firstof-its-kind partnership with Randstad to be value-accretive as it helps scale presence in Europe and Australia, enhances its position in regulated and highgrowth verticals via marquee customer relationships, and cross-sell opportunities in acquired logos. The management expects no material margin impact in FY27 and margin improvement from year 2 onward, with revenue growth and synergies benefits.
4) It is introducing BlueVerse Currency, reflecting commercial innovation as AI reshapes IT delivery. This is a unified pricing model across five dimensions of delivery (people, agents, platforms, accelerators, and tokens), enabling outcome-based pricing, productivity sharing, and revenue decoupling from effort in AI-led engagements.
5) The workforce is evolving from a traditional pyramid to a diamond structure, with strategy and governance roles at the top, AI builders and domain experts forming the core, and learners supported by automation forming the base.
6) It has built over 80 agentic solutions across verticals, each tied to specific business KPIs and powered by domain-trained SLMs. We retain ADD and TP of Rs4,700, at 20x Mar-28E EPS.
Lakshya 2031 – doubling down on growth
LTM's five-year ambition targets 2x revenue (M&As likely to contribute 15-17%) and ~200bps EBIT expansion from FY26. It expects ~1.4x headcount growth over this period, driving improvement in revenue per employee. Unprecedented pace of innovation and growing AI adoption is creating opportunities for tech services players across context, cost, and change. LTM believes that it is well-positioned to capitalize on opportunities at the intersection of domain and technology. It laid out a framework for execution governed by the New Horizon program across three horizons: growth, pivot, and excellence.
Overall TAM expanding despite core services market getting disrupted
The management expects net AI-led compression to be ~USD0.3trn. However, this is likely to be negated by anticipated growth through platformized services adding ~USD0.5trn and ~USD0.8trn from new business AI and AI-led digital engineering services, expanding TAM by ~USD1trn to USD2.3trn. The three AI-led LOBs is specifically designed to capture the new opportunity rather than defend the shrinking core.
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