LTM Ltd Q2 FY27 Earnings Call: AI Revenue Grows 40% YoY, Guides Flat FY27 EBIT Margin

LTM Ltd held its Q2 FY27 earnings call on October 16, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Steady Margins, Softer PAT on One-Off Base Effects

• Revenue of $1.235B / Rs.11,808 Cr — YoY growth of 5.1% in USD and 13.6% in INR; in constant currency, 1.1% sequential and 6.1% YoY.
• EBIT margin at 15.6% — up 10 bps QoQ (Q1 FY 2026-2027 was 15.5%); PAT margin at 11.7%, down from 12.7% in Q1 FY 2026-2027 due to a one-time gain on Voicing.ai in Q1.
• Basic EPS at Rs.47.2 — versus Rs.49.5 in Q1 FY 2026-2027.
• DSO improved to 84 days — but cash flow to PAT fell to 39% (vs 79% in Q1 FY 2026-2027), impacted by advance payments and a one-time gratuity provision.
• ROCE at 28.5% — vs 29.8% in Q1 FY 2026-2027; trailing 12-month attrition stable at 13.3%; utilization (excl. trainees) flat at 86.4%.
• Interim dividend of Rs.25/share — a 13.6% YoY increase vs Q2 FY 2025-2026; ESG leadership status achieved (NSE score 76, SES score 77.3).

AI at 13.4% of Revenue, Premium Rate Cards, Deliberate TCV Pivot

• AI revenue reached 13.4% of total revenue — growing 40% YoY in Q2 FY 2026-2027; management stated AI project gross margins are better than traditional services, with pure-play AI native SOWs typically lasting 6 to 12 months, supplemented by downstream data modernization and application remediation work.
• Weak Q2 TCV attributed to a deliberate pivot — management framed it as a shift toward AI native deals, incentivized by new commission structures, not a change in macro demand conditions (stable for the last 2-3 quarters).
• AI rate cards carry a premium — signed up with customers as of Q2 FY 2026-2027; management acknowledged pricing in traditional large deals as 'unmanageable'.
• BlueVerse ecosystem expanded — launches of Blueverse One Token, Right Logic, and Sovereign Domain App, 6 AI patents, and a new business unit for DCCs in Q2 FY 2026-2027.
• Deflation pass-through at 60% — LTM has passed on 60% of productivity headwinds to customers as of Q2 FY 2026-2027, covering 60-70% of its portfolio; the remaining 20-30% will undergo renewal/consolidation/AI infusion cycles. Management stated industry-wide deflation is expected to persist for a couple of fiscals (FY 2027-2028 / FY 2028-2029).
• AI proof points cited — Enterprise AI (100% classification, 50% cycle time reduction), Business AI (40% HR ticket reduction), Marketing AI (50% productivity gain, 10x faster launch), Industrial AI (50% manual effort reduction).
• Margin pressure from AI assets flagged — ongoing investments (Blueverse token, quarterly SLMs) will temporarily pressure margins before contributing to overall company margins over time.

Three of Four Verticals Grew ~7% YoY; Consumer Flat Sequentially

• Financial Services returned to YoY growth — 0.4% YoY and 3.1% sequential in Q2 FY 2026-2027; Consumer grew 8.6% YoY, Production 7.4% YoY, Tech & Services 7% YoY.
• Consumer flat sequentially — down 1% in Q1 FY 2026-2027 and flat in Q2 FY 2026-2027; management attributed this to travel and hospitality tightening budgets amid the fuel/energy price crisis, and expects customers in this sector to reallocate budgets previously put on hold into new transformation initiatives.
• Tech vertical decline attributed to seasonality — a seasonal renewal cycle plus Saudi business impact (classified under tech via a JV).
• Geographic split — Americas grew 1.5% sequential, Europe 1% sequential; RoW declined 1.4% due to the Middle East, with management attributing RoW weakness to the Saudi business.
• CBDT deal contributed revenue in Q2 FY 2026-2027 — ramp-up is linked to hardware delivery, which has improved vs Q1 FY 2026-2027.

Fastest $100M FS Milestone; ACV Disclosure Under Consideration

• Order inflows of $1.3B — management characterized them as short-tenured, incremental AI-centric deals with faster revenue realization, while noting the overall pipeline remains healthy; a client was added to the $100 million+ category in Q2 FY 2026-2027.
• $100M FS account announced in Q2 FY 2026-2027 — the fastest such milestone in LTM's history, attributed to AI-led engagement; a top BFSI client's vendor consolidation (50+ to 5 vendors) headwinds were absorbed in H2 FY 2025-2026, with sequential growth resuming in Q1 and Q2 FY 2026-2027 and guided to continue through Q3-Q4 FY 2026-2027.
• ACV disclosure under consideration — CEO Venu Lambu stated management is considering sharing ACV data alongside TCV, noting the current order book is already majority ACV; expects to be definitive on the format in one more quarter (by Q3/Q4 FY 2026-2027).
• GenAI-led deals are short-tenure and iterative — per the CEO, with faster revenue realization, though large-scale switching deals remain in the pipeline.
• Dividend payout ratio raised to ~45% in FY 2025-2026 — from ~40%; management acknowledged an analyst's point that LTM generates ~Rs.4,000 crore annually in cash and holds Rs.15,000 crore+ on its books, but indicated the current balanced strategy prioritizes reinvestment in AI, GCC business (with group real estate), Blue Verse, talent transformation, and value-accretive M&A in white spaces, adhering to the L&T group's shareholder value framework.

FY27 EBIT Target Flat at ~15.4%; Layered Hedging to Continue

• FY 2026-2027 consolidated EBIT margins targeted flat vs FY 2025-2026 (~15.4%) — per CFO Vipul Chandra; Sandeep Shah of Equirus Securities clarified the guidance applied on a consolidated basis, which Vipul Chandra confirmed.
• Organic margins expected to hold and improve — supported by robust regular services demand, the CBDT deal ramp-up, and cost-control initiatives, countering typical H2 FY 2026-2027 headwinds from a heavier pass-through revenue mix.
• Randstad M&A margin headwind limited to amortization — which the CFO characterized as not significant; the Randstad digital businesses acquisition (Europe/Australia) is on track, with approvals expected in Q3 FY 2026-2027.
• Headcount at 88,835 — +949 net at end of Q2 FY 2026-2027; fresher additions of 1,743; the AI 1000 program has ~1,000 employees in training journeys and 2,000+ certifications.
• Growth and headcount will remain non-linear — management cited FY 2025-2026 where revenue grew without headcount increase; current FY 2026-2027 additions reflect demand outlook, with AI-driven non-linearity expected to be gradual.
• Forex losses below EBIT may continue in Q3-Q4 FY 2026-2027 — per CFO Vipul Chandra, citing a layered hedging policy covering the next 2-3 years aimed at maintaining a consistent earnings profile; further rupee depreciation could increase these losses, but would provide a concomitant benefit to overall business profitability.

H2 Better Than H1; Double-Digit Aspiration for FY 2027-2028

• H1 FY 2026-2027 delivered 5.4% YoY growth — management expects stronger sequential growth in FY 2026-2027, driven by accelerating AI adoption across the stack, positioning AI as the primary growth driver.
• Q3 and Q4 FY 2026-2027 guided sequentially better than Q1 FY 2026-2027 — per CEO Venu Lambu, with continued growth momentum in the second half; H2 FY 2026-2027 guided better than H1 FY 2026-2027.
• Saudi drag quantified at ~0.6-0.7% QoQ — the CEO noted underlying Q2 FY 2026-2027 QoQ growth would have been ~1.7-1.8%; three of four verticals grew ~7% YoY.
• FY 2026-2027 endeavor — management stated the endeavor for FY 2026-2027 is to come as close as possible to the growth achieved in FY 2025-2026.
• Double-digit growth trajectory aimed for FY 2027-2028 — the CEO cited the Randstad acquisition (closure by end of Q3 FY 2026-2027) and market realignment in Q4 FY 2026-2027 as key enablers; a good outlook for FY 2027-2028 was also cited, driven by strong customer growth, with a return to normal growth expected in the tech vertical from Q3 FY 2026-2027.
• OCF normalization expected in Q3 FY 2026-2027 — the lower Q2 ratio was driven by gratuity funding (substantial chunk done, deadline Oct 2026), final dividend TDS, and advance tax outflows, with a minor residual impact from remaining gratuity funding.
• Unanswered TCV question — analyst Girish Pai asked whether LTM saw similar end-of-Q2 TCV weakness as peers indicated deals pushed to Q3 FY 2026-2027 and beyond; the question went unanswered due to audio disruption.