LTM Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Venu Lambu, Vikas Jadhav, Vipul Chandra Singh

Analysts

14 Anmol Garg, Ashwin Mehta, Dipesh Mehta, Girish Pai, Hasmukh Vakharia, Prateek (HSBC), Rahul Jain, Rajiv Berlia, Rohit Thorat, Sandeep Shah, Sulabh Govila, Sumeet Jain, Sushovan Nayak, Vibhor Singhal

Financials & KPIs

Geographic & Segment Commentary

• Financial Services: Delivered strong +3.2% sequential growth (CC), returning to QoQ expansion as flagged at Q4 FY26, though -2.5% YoY. Segment margins improved QoQ on revenue recovery and better utilization; BFSI top-client productivity headwinds are now behind. Management sees strong demand traction continuing.

• Technology & Services: Grew +3.4% sequentially and +10% YoY (CC), reaching double-digit annual growth. Heavily North America-centric; management is confident momentum is sustainable through Q2 and beyond.

• Consumer: Declined -0.7% sequentially but grew +18.2% YoY (CC). QoQ dip driven by delayed ramp-ups in the India income-tax department deal (hardware/memory-chip shipment delays amid war-related supply issues) and Middle East project deferrals. Management expects the delayed ramp-up to recover from Q2.

• Production: Declined -5.7% QoQ primarily on seasonal pass-through runoff (typical at year-start); grew +5.3% YoY.

• Client / Geography Notes: All client categories expanded sequentially and YoY; Top 5 clients grew +4.5% QoQ and Top 10 +4.3% QoQ. USD 50 million+ bucket now has 15 clients (+1) and USD 20 million+ bucket has 52 (+11). Middle East is <3% of revenue; North America growth is broad-based and bottomed out.

Company-Specific & Strategic Commentary

• AI-Centric Reorganization: Now operates through three lines of business — iRun (operate/secure), iTransform (modernize/transform), and Business AI (reimagine processes/models) — underpinned by the BlueVerse™ AI ecosystem (domain SLMs, prebuilt agents, AI-native business models, expanded GTM partnerships). Delivers four types of AI work: Enterprise AI, Business AI, Industrial AI, and Creative AI.

• AI Revenue Quantification: Business + Creative + Industrial AI collectively contributed ~USD 150 million per quarter on a run-rate basis; Enterprise AI is embedded across all services rather than measured separately.

• BlueVerse™ Launches & Momentum: Launched BlueVerse™ iRun (integrated Ops), BlueVerse™ Databricks (data transformation), BlueVerse™ RightLogic (cybersecurity remediation), and BlueVerse™ Currency (outcome-based pricing). BlueVerse™ Voicing SLM completed 17 client implementations in 12 months, including two Q1 wins (US leisure travel and global financial administration), both under outcome-based commercial constructs. New BlueVerse™ Studio facility opened in Bengaluru.

• AI 1000 — Forward Deployed Engineers (FDEs): Strategic workforce initiative targeting 1,000+ FDEs; majority of skilling expected between Q2-Q3, with the first cohort already deployed on client projects while training.

• Strategic Investments & Partnerships: Participated in Uniphore's funding round to accelerate domain-specific SLM co-development; converted Voicing.AI SAFE/warrants into equity (driving a one-time P&L gain and higher stake). Signed partnership with OVHcloud for sovereign AI Cloud deployment in Europe. Recognized as a market leader in HFS Horizons (Next Gen IT Infrastructure) and ISG Provider Lens (SAP Ecosystem), won Google Cloud Partner of the Year 2026 (two categories) and Databricks Global COE Partner of the Year 2026; CRISIL reaffirmed AAA/Stable and A1+ ratings with CRISIL ESG score of 77 (core ESG 83, leadership category).

• Randstad Acquisition: Regulatory applications submitted across countries and on schedule; direct transaction with no investment-banking costs. A three-part 360-degree relationship: IT services for Randstad, talent-sourcing outsourcing to Randstad, and takeover of Randstad's technology/digital business in Europe and Australia. Closure targeted end-Q2/early-Q3; the Randstad IT services component is already ramping from Q2.

• Client Productivity Transition Complete: Productivity-linked pricing negotiations with large clients are behind; management now views this as a source of strategic strength rather than a headwind.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

FY27 Growth Acceleration & Q2 Outlook

• Question: Sulabh Govila (Morgan Stanley) asked whether Q1 business momentum, ex-seasonal pass-through and Middle East headwinds, should reflect from Q2 and whether any moving parts could alter the trajectory. (Sandeep Shah later clarified whether the outlook was organic and QoQ CC.)
• Answer: Venu Lambu said the largest segments have entered a growth trajectory that should continue into Q2, with no issues across global industry segments barring an unpredictable geopolitical escalation; confirmed the outlook is organic and QoQ constant-currency (inorganic Randstad closes early Q3).
• Question: Prateek (HSBC) noted FY27 "better than FY26" implies roughly 2%+ CQGR from here.
• Answer: Venu Lambu reaffirmed, attributing Q1 softness to one-offs (seasonal pass-through runoff, India tax-deal delay, Middle East billing) and citing strong underlying momentum — Financial Services +3.2%, Tech & Services +3.4% QoQ, Consumer +18.2% YoY — with the announced large deal ramping from Q3.

AI Deflation Chapter Closed; New Book Priced at New Reference Points

• Question: Sumeet Jain (CLSA) asked how much of the portfolio has already seen AI deflation and whether the rest will face similar revenue pullback.
• Answer: Venu Lambu said productivity headwinds were material only in top accounts/top segments and that chapter is now behind; smaller accounts have enough work to offset transaction-level deflation, making it net positive. Vipul Chandra noted LTM started this journey earliest, so most top clients have already passed through the phase.
• Question: Hasmukh Vakharia asked whether clients could return asking for further productivity given rapid model-efficiency gains.
• Answer: Venu Lambu said the market has moved from the AI-creation narrative to AI adoption; all new deals are built on the new AI approach across solutioning, delivery and pricing — the large deal announced this quarter already bakes in AI productivity at the new price point, so there is no existing-book comparison.

Randstad Integration, Ramp & Margin Trajectory

• Question: Vibhor Singhal (Nuvama) asked about the integration timeline, tail rationalization status, and whether margin expansion assumptions still hold including the acquired business.
• Answer: Venu Lambu said consultation and regulatory processes are on schedule; closure expected by end-Q2 or the first weeks of Q3, with limited pre-approval intervention — investors should assume previously shared financials. Vipul Chandra said no significant margin impact is expected because the three-part deal (IT services for Randstad, talent outsourcing, business takeover) contributes savings; organic margin expansion plus buffers should protect full-year margins, though a 1-2 quarter amortization/mathematical impact is possible.
• Question: Sandeep Shah (Equirus) asked whether the Randstad IT services deal ramps from Q2 and whether H2 margins could be lower than H1.
• Answer: Vipul Chandra confirmed the IT services component has already started, ramping from Q2; H2 margin concern is not valid — guidance remains similar or better margins than last year.

India Tax Department Deal: Ramp-up Profile & Margin Risk

• Question: Dipesh Mehta (Emkay) asked whether the income-tax deal ramp would be gradual or sharp, and whether pricing fluctuation poses margin risk; Rajiv Berlia (JM Financial) asked when the deal will ramp.
• Answer: Venu Lambu said Q2 will be higher than Q1; hardware shipment visibility at the beginning of Q2 should enable milestone delivery, with the program back on its original schedule between Q2-Q3. On margins, nothing has been factored because memory-price pressure is external to LTM's delivery/cost and impacts the broader supply chain; the client is aware and conversations are ongoing.

Hyperscaler / AI Lab FDE Initiatives — Competition or Partnership?

• Question: Girish Pai (BOB Capital) and Sumeet Jain (CLSA) asked about AI labs and hyperscalers creating dedicated AI deployment entities (e.g., Microsoft's ~6,000 FDEs and USD 2-3 billion investment) and whether these are competitors or partners.
• Answer: Venu Lambu said the industry has shifted from AI creation to AI deployment; the global FDE pool is only a few thousand, so the ecosystem needs far more. Hyperscaler deployment units mirror the earlier cloud professional-services journey, where LTM ultimately became either their customer or implementation partner. LTM is one of the largest Copilot users, works with Gemini and AWS, has set up Centers of Excellence with both leading AI labs, and is finalizing a strategic partnership announcement with one AI lab.

Margin Walk: New Horizons + Forex vs Wage Hike

• Question: Girish Pai (BOB Capital) requested a numeric margin walk between Q4 and Q1, and asked why BFSI segment margins improved.
• Answer: Vipul Chandra said the +40 bps QoQ gain = New Horizons operational efficiencies plus forex benefit, partially offset by wage hikes; the ~1% wage-hike impact and forex impact largely cancelled each other, so the net improvement is essentially operational efficiencies. BFSI margin improvement was driven by revenue growth returning and better utilization.

Subcontractor Spike from Vendor Consolidation

• Question: Ashwin Mehta (Ambit Capital) asked about the nature of work served by subcontractors (up +130 bps QoQ / +320 bps YoY); Prateek (HSBC) asked whether subcon will stabilize.
• Answer: Venu Lambu attributed the spike to vendor-consolidation deals where clients ask LTM to absorb tail vendors; where clients insist on retaining existing resources, those resources are initially taken on as subcons due to critical contextual knowledge, then transitioned to LTM's end-state model — not indicative of a trend, and preference remains direct transition. Vipul Chandra added that vendor-consolidation deals typically show subcon uptick in the initial ramp, which normalizes over time.

SG&A Efficiency & Sales Investment

• Question: Ashwin Mehta (Ambit Capital) asked whether SG&A would trend toward 11-11.5% of sales or remain at current levels.
• Answer: Venu Lambu said SG&A stays stable at current levels; LTM is not cutting sales and is investing in sales enablement (AI-native selling training), with efficiency gains coming from AI adoption across internal IT, finance, HR and support functions. Vipul Chandra added SG&A is not likely to rise to 11-11.5%; minor QoQ variation is possible from continued sales investment, but achieved efficiencies are sustainable.

Utilization & Fresher Hiring Plans

• Question: Rohit Thorat (Axis Capital) asked whether utilization is optimal and whether hiring needs to step up; Dipesh Mehta (Emkay) asked for the full-year fresher plan.
• Answer: Vipul Chandra said utilization is targeted at 86-87%, currently mid-range; 1,308 freshers were added in Q1, and the pyramid will shift toward a diamond shape over time. Venu Lambu added the minimum is ~1,300 freshers per quarter with efforts to accelerate, noting last year's 6,000+ freshers brought strong AI-native skills.

Voicing.AI & Uniphore Strategic Investments

• Question: Sushovan Nayak (Anand Rathi) asked about the Voicing.AI fair-value gain mechanics, stake plans, its role in the ecosystem, and the Uniphore partnership structure.
• Answer: Vipul Chandra said the one-time gain resulted from converting investment instruments into preferred stock/equity at fair value — a first-time recognition required through P&L; future fair-value changes will flow through OCI. Venu Lambu said BlueVerse™ Voicing transforms contact-center and customer-service processes (e.g., member verification, travel booking inquiries) through agentic models on the Voicing SLM, not just BPO replacement; the Voicing.AI stake has already increased via conversion of SAFE and incremental warrants, with possible further increase over five years. The Uniphore investment deepens the SLM co-development partnership; investment amounts were not disclosed due to private-round confidentiality.

Path to Five-Year Revenue Doubling & Order Book Normalization

• Question: Sumeet Jain (CLSA) asked what will lift growth from the current 6-8% range toward the five-year revenue-doubling ambition; Hasmukh Vakharia asked what it would take to get order book from USD 1.7 billion to USD 2 billion+.
• Answer: Venu Lambu cited three growth levers: (1) faster European growth via white space and the Randstad deal from Q3; (2) Asia-Pacific white space with marquee clients via the acquisition; and (3) faster scaling of the three measured AI work types (Business, Industrial, Creative AI) on top of Enterprise AI-driven large deals. On order book, a stable USD 1.7 billion is actually positive given ~15-20% AI-deflation normalization — it represents more work than the same TCV a year ago — and large-deal pipeline remains strong; management prefers consistent deal flow over one-off spikes, with discretionary spend expected to improve in H2.

Key Takeaway

LTM delivered a steady start to FY27 with revenue of USD 1,224 million (+0.3% QoQ / +6.4% YoY CC) and EBIT margin expansion of 40 bps sequentially to 15.5% despite wage hikes, driven by New Horizons operating efficiencies. Financial Services (+3.2% QoQ) returned to sequential growth and Technology & Services grew 3.4% QoQ / 10% YoY, while Consumer (+18.2% YoY) absorbed temporary India hardware-shipment and Middle East war-related delays. Management reiterated that FY27 organic growth will exceed FY26's 6% base, accelerating from Q2 through H2, backed by a stable USD 1.7 billion order book, completed productivity-pricing transitions across top accounts, and a ~USD 150 million quarterly AI revenue run rate across Business, Industrial and Creative AI. The Randstad acquisition remains on track for end-Q2/early-Q3 closure with its IT services component already ramping; FY27 margins are guided similar or better than FY26. Key watch points are India tax-deal supply-chain recovery, geopolitical escalation, and Randstad's potential 1-2 quarter consolidation impact.