LTM Q2 FY27 Earnings Call — Analysis (NSE: LTM)
LTM delivered Q2FY27 revenue of ₹11,808 Cr (+1.1% QoQ CC, +5.1% YoY CC) with EBIT margin expanding 10 bps to 15.6%, driven by AI revenue surging 40% YoY to 13.4% of total revenue.
Result quality: stable — Steady quarter. Management sentiment: optimistic.
The take
Q2FY27 Revenue ₹11,808 Cr ( +1.7% QoQ ) . New guidance — FY27 fy27 consolidated ebit margin similar levels to previous year . New story: AI Monetization and Shorter Deal Cycles .
Results
Revenue rose 1.7% QoQ and 13.6% YoY to ₹11,808 Cr (USD 1.235B, +1.1% QoQ CC) with EBIT margin expanding 10 bps QoQ to 15.6%, while OCF/PAT dropped to 39% due to one-time gratuity funding and advance tax.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹11,808 Cr | +1.7% | qoq · Q2FY27 |
| Revenue (USD) | ₹10,312 Cr | +1.0% | qoq · Q2FY27 · Stated as USD 1.235B |
| EBIT Margin | 15.6% | +10bps | qoq · Q2FY27 |
| PAT Margin | 11.7% | -100bps | qoq · Q2FY27 · Lower due to lack of one-time investment gain in Q1 |
| Basic EPS | ₹47.2 | -4.6% | qoq · Q2FY27 · vs ₹49.5 in Q1FY27 |
| Order Inflow | ₹10,855 Cr | point_in_time · Q2FY27 · Stated as USD 1.3B in Q2FY27 | |
| Cash & Investments | ₹15,300 Cr | +1.9% | qoq · Q2FY27 · vs ₹15,021 Cr in Q1FY27 |
| DSO | 84 days | -1 day | qoq · Q2FY27 |
| OCF to PAT Ratio | 39% | -4000bps | qoq · Q2FY27 · vs 79% in Q1FY27 |
| Interim Dividend | ₹25 | +13.6% | yoy · Q2FY27 · per equity share |
Guidance
Management expects stronger growth in H2FY27 compared to H1FY27, targeting full-year FY27 EBIT margins flat YoY on a consolidated basis and closing the Randstad Digital acquisition in Q3FY27.
What management committed to
- [LTM Limited] expects sequential revenue growth in H2FY27 to be stronger than H1FY27. — H2FY27
- [LTM Limited] targets maintaining full-year FY27 EBIT margin at similar levels to FY26 on a consolidated basis. — similar levels to previous year, FY27
- [LTM Limited] expects to complete and receive all approvals for the acquisition of Randstad digital businesses in Europe and Australia in Q3FY27. — Q3FY27
- [LTM Limited] expects the BFSI segment to continue delivering sequential revenue growth in Q3FY27 and Q4FY27. — H2FY27
- [LTM Limited] expects high-tech vertical to return to normal growth trajectory starting Q3FY27 following seasonal renewal impacts. — Q3FY27
Key themes
AI monetization and BFSI recovery
How the narrative shifted
- AI Monetization and Shorter Deal Cycles: AI deals are shorter tenure with faster revenue realization, offsetting lower optical headline TCV and enabling premium pricing via dedicated AI rate cards.
- BFSI Turnaround and Vendor Consolidation: Having absorbed prior productivity concessions, BFSI has returned to YoY expansion and added a new $100M+ client, positioning it for sustained sequential growth.
- Middle East Disruption and Tech Seasonality: Q2 revenue growth faced an ~0.6-0.7% drag due to conflict-related disruptions in Saudi Arabia and a known annual top-client contract renewal cycle in high-tech.
- Margin Discipline and M&A Integration: Operating efficiencies and cost control are expected to absorb wage hikes and Randstad Digital acquisition amortization, preserving full-year consolidated margins.
- Balanced Capital Allocation and Strategic M&A: Holding cash reserves to fund selective white-space acquisitions and organic AI capabilities rather than mirroring mega-cap peer dividend payout ratios of 80-100%.
Operational commentary
- AI engagements expanded rapidly, with AI revenue reaching 13.4% of total revenue (+40% YoY) and cumulative AI revenue growing 47% YoY.
- Launched BlueVerse OneToken (workload routing and governance layer), BlueVerse RightLogic (cybersecurity/risk framework), and SovereignSphere domain models.
- Partnered with Anthropic to embed Claude/Claude Code into BlueVerse delivery fabric, Glean for enterprise knowledge search, and Cognition for Devin software agent.
- Added a financial services client to the USD 100M+ category; all client tiers from USD 5M+ to USD 100M+ expanded YoY.
- Net headcount increased by 949 sequentially to 88,835; added 1,743 freshers during the quarter. Trailing 12-month attrition held steady at 13.3%.
- Regional performance showed Americas growing 1.5% QoQ CC and Europe 1.0% QoQ CC, while Rest of World declined 1.4% QoQ CC due to Middle East war disruptions impacting Saudi operations.
- Opened new Global Delivery and AI Competency Center in Kolkata and expanded BlueVerse Studio to Hyderabad.
Analyst Q&A
Q. Why were deal TCV numbers softer this quarter, and is it a structural shift towards short-duration AI work?
The deal intake reflects an intentional push into short-tenured AI-centric deals that carry faster revenue realization without long transition periods. Management incentivized the sales force to focus on AI deals, though large vendor consolidation deals will still periodically add to lumpiness.
Q. Will management consider providing ACV (Annual Contract Value) metrics given the shift towards shorter AI deals?
Management acknowledged that ACV forms the majority of the current order book and agreed to consider sharing formal ACV vs TCV breakdowns after waiting one or two more quarters to be definitive.
Q. Why did cash conversion drop sharply and when will it normalize?
The decline in OCF/PAT to 39% was driven by one-time gratuity liability funding under revised labor laws, delayed TDS payments on the Q1 dividend, and advance tax payouts. Management expects cash flow conversion to normalize in Q3 with minor residual gratuity funding.
Q. Why not increase capital return to shareholders given ₹15,300 Cr of cash on books?
Management defended the ~45% payout ratio, arguing that capital is required for organic AI investments, the GCC business buildout, and strategic white-space M&A like Randstad Digital, while maintaining alignment with L&T group capital discipline.
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