LTM Limited Q1 FY27 Earnings Call Summary

Revenue

Margin

Demand

Guidance

Tone

Event Participants

Executives

3 Venu Lambu, Vikas Jadhav, Vipul Chandra

Analysts

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

Financials & KPIs

Metric	Reported	Commentary
Revenue (USD)	USD 1,224 million	+0.3% QoQ and +6.4% YoY in constant currency; +0.1% QoQ and +6.1% YoY in dollar terms
Revenue (INR)	₹11,608 crores	+2.8% QoQ and +18% YoY, aided by rupee tailwind
Order book	USD 1.7 billion	Stable, including two large deal wins; steady for last 5-6 quarters despite AI-driven price normalization
AI revenue (Business + Creative + Industrial)	~USD 150 million quarterly run rate	New disclosure; Enterprise AI embedded across iRun/iTransform delivery, not separately quantified
EBIT margin	15.5%	+40 bps QoQ and +120 bps YoY (14.3% in Q1 FY26); New Horizons operational efficiencies plus forex, partly offset by ~1% wage hike
PAT	₹1,469 crores	+9.5% QoQ and +17.1% YoY; includes one-time Voicing.AI fair value gain on instrument conversion
PAT margin	12.7%	Up from 11.9% in Q4 FY26
Basic EPS	₹49.5	vs ₹45.4 in Q4 FY2026
Effective tax rate	25.8%	vs 26.3% in Q4
DSO	85 days	vs 84 days in Q4
OCF/PAT	79%	Down from 96% in Q4; 88% normalized for one-time gain
FCF/PAT	63%	vs 75% in Q4; 70% normalized
Cash & investments	~USD 1.5 billion (₹15,021 crores)	Post FY2026 final dividend payout; vs ₹15,445 crores in Q4
ROCE	29.8%	vs 29.2% in Q4
Utilization (excl. trainees)	86.4%	vs 85.7% in Q4; within 86-87% target range
Headcount	87,886	Fresher addition of 1,308 in Q1
TTM attrition	13.3%	Stable
Client metrics	15 clients in USD 50M+; 52 in USD 20M+	Added 1 and 11 clients respectively; Top 5 +4.5% QoQ, Top 10 +4.3% QoQ; all client categories expanded QoQ and YoY

Geographic & Segment Commentary

Financial Services: Delivered strong 3.2% sequential expansion in constant currency, marking the anticipated return to growth; YoY declined 2.5%. Segment margin improvement driven by revenue growth returning and utilization gains, expected to continue as the segment builds momentum.

Technology & Services: Strong growth of 3.4% sequentially and 10% YoY; heavily North America-centric, with management confident of sustaining double-digit momentum.

Production: Declined 5.7% QoQ mainly on seasonal pass-through fall-off; grew 5.3% YoY. Decline characterized as transient and not indicative of underlying demand.

Consumer: Declined 0.7% sequentially but grew 18.2% YoY. QoQ decline due to delayed ramp-ups in India (tax department project) and Middle East, tied to hardware shipment and memory chip supply issues during the war situation; shipments expected to accelerate in Q2.

Company-Specific & Strategic Commentary

New Operating Model: Reorganized into three lines of business - iRun (operate/secure tech estates), iTransform (transformation/modernization), and Business AI (reimagining business processes), delivering four types of AI work: Enterprise, Business, Industrial, and Creative AI.

BlueVerse™ Ecosystem Expansion: Launched BlueVerse™ iRun, BlueVerse™ Databricks, BlueVerse™ RightLogic (cybersecurity), and BlueVerse™ Currency (outcome-based pricing construct); BlueVerse™ Voicing SLM completed 17 unique implementations in past 12 months, including two key wins in insurance and travel.

AI 1000 Initiative: Strategic workforce transformation to develop 1000+ Forward Deployed Engineers (FDEs); majority of skilling expected between Q2-Q3, with some already deployed on client projects; positioned as first-mover in a market where global FDE supply is only a few thousand.

Strategic Investments: Participated in Uniphore's investment round to strengthen SLM partnership; Voicing.AI stake increased via warrant conversion (instrument conversion triggered one-time P&L recognition, future changes through OCI); investment amounts not disclosed due to private round constraints.

Partnerships & Recognitions: Signed OVHcloud partnership for sovereign AI Cloud in Europe; won Google Cloud Partner of the Year 2026 (Media & Entertainment, Infrastructure Modernization NA) and Databricks Global COE Partner of Year 2026; CRISIL reaffirmed AAA/Stable and A1+ ratings.

Randstad Acquisition: Regulatory applications submitted across countries, on track for closure by end of Q2/beginning of Q3; 360-degree deal has three components (IT services for Randstad, talent sourcing outsourcing to Randstad, takeover of Tech & Digital business in Europe and Australia); ramp-up already started in Q2.

Guidance & Outlook

Metric	Guidance / Outlook	Commentary
Revenue growth (organic, CC)	FY2027 growth better than FY2026's 6% CC base; acceleration through Q2 into H2	Driven by Financial Services and Tech momentum, completion of productivity transition with top clients, India project ramp-up in Q2, and Randstad large deal ramp from Q3
EBIT margin	Continued expansion	New Horizons operational efficiencies to sustain margin growth; wage hike (~1%) and forex broadly offsetting each other
Randstad acquisition	Closure end of Q2/beginning of Q3 FY27; ramp-up started Q2	Regulatory approvals on schedule; no significant margin impact expected, with other two deal components contributing savings and incremental profits
Fresher hiring	~1,300 per quarter at minimum	Aiming to accelerate; 6,000+ hired last year with strong AI-native skill outcomes
Utilization	86-87% target range	Currently mid-range; QoQ variations possible
SG&A	Stable at current levels	Efficiencies sustainable; not expected to rise to 11-11.5% of sales; continued investment in sales enablement

Risks & Constraints

Risk	Context
Geopolitical tensions (Middle East)	Middle East is <3% of revenue; war situation impacted Q1 billing and hardware supply chains. Management cannot rule out escalation beyond their control affecting Q2, though growth verticals are well positioned.
India project hardware delays	Income Tax department deal delayed due to memory chip and hardware shipment unpredictability from the war; delayed revenue expected to materialize in Q2, but shipment visibility over next 1-2 months remains a monitoring point.
AI deflation / productivity re-pricing	Management states the productivity transition with top clients is complete; new deals priced at AI-inclusive levels (~15% lower than a year ago). Risk of further client requests exists if model efficiency improves materially, though management views the new pricing reference point as reset.
Subcontractor cost spike	Subcon up 130 bps QoQ and 320 bps YoY driven by vendor consolidation deals requiring transitional absorption of client resources; expected to normalize over time as engagements move to end-state delivery model.
Randstad integration impact	Consolidation could create 1-2 quarters of margin drag (amortization, initial costs); management is building buffers via the other two deal components and organic margin expansion. Synergies expected to kick in within a quarter or two post-closure.
Discretionary spend recovery	Client discretionary spending is better than last year but not at full strength; prioritization-linked spending remains sensitive to geopolitical headlines and energy prices, which could temper growth acceleration.

Q&A Highlights

Growth Outlook & Q2 Acceleration

Question: Is it fair to assume business momentum reflects from Q2 onwards, adjusting for seasonal pass-through and Middle East macro headwinds? (Sulabh Govila)
Answer: Some of the biggest segments are in growth trajectory and should continue into Q2 barring uncontrollable geopolitical escalation. No issues seen across global industry segments. (Venu Lambu)
Question: Will FY2027 growth be better than the growth seen in FY2026's first three quarters? (Girish Pai)
Answer: FY2026 delivered 6% CC growth as the base foundation; the effort is to improve further. Expectation is clearly that FY2027 will be better than FY2026. (Venu Lambu)
Question: Does "better than FY2026" hold, implying ~2%+ CQGR from here? (Prateek)
Answer: Q1 had transient drags - production seasonality, India project hardware delays, Middle East billing. Excluding those, Financial Services grew 3.2% and Tech 3.4% sequentially. The large deal kicks off in Q3. Multiple levers support growth better than FY2026. (Venu Lambu)

AI Deflation & Productivity Transition

Question: How much of the portfolio has seen through AI deflation, and how much is yet to come? (Sumeet Jain)
Answer: The productivity headwind chapter is behind - most top clients have already gone through the phase. Smaller accounts are net positive given the volume of work. All new deals are priced at new AI-based productivity levels, so the reference point has been reset. (Venu Lambu, Vipul Chandra)
Question: Could clients come back again for further productivity given rapid model efficiency gains? (Hasmukh Vakharia)
Answer: The conversation has moved from AI creation to AI adoption - topics are now ROI, cost, and delivering more work with AI. New deals, including the large deal announced this quarter, already factor in AI productivity at new price points. (Venu Lambu)

SG&A Efficiency & Sales Investment

Question: Should SG&A now move closer to 11-11.5% of sales, or stay at current levels? (Ashwin Mehta)
Answer: SG&A expected to remain stable at current levels; efficiencies are sustainable and not expected to revert to 11-11.5%. Continued investment in sales enablement, including training on AI-led selling. (Venu Lambu, Vipul Chandra)
Question: Is the 8-9% sales headcount moderation on the support side or a specific geography? (Sulabh Govila)
Answer: Driven by enabling/support functions - internal AI adoption in IT, finance, HR, and operations functions is delivering productivity benefits. (Venu Lambu)

Subcontractor Spike

Question: What is driving subcon up 130 bps QoQ and 320 bps YoY? (Ashwin Mehta)
Answer: Vendor consolidation deals where clients expect tail-vendor resources to be absorbed as subcons initially due to critical contextual knowledge, then transitioned into LTM's end-state delivery model over time. This is a spike, not a trend, and should decrease. (Venu Lambu)
Question: Will subcon stabilize or become a lever for margin improvement? (Prateek)
Answer: There are two types of vendor consolidation deals - direct transition to LTM teams (preferred) and the second category creating the subcon spike with longer transitions. Expect normalization as engagements mature. (Venu Lambu)

Consumer Segment & India Deal Ramp

Question: Will the Consumer drag continue or worsen? (Rohit Thorat)
Answer: Consumer grew 18.2% YoY. The QoQ decline is tied to the India tax department deal delay (hardware/memory shipments during the war) and Middle East projects. Shipments expected to accelerate; optimistic on consumer momentum. (Venu Lambu)
Question: How sharp will the Income Tax deal ramp-up be? (Dipesh Mehta, Sandeep Shah, Rajiv Berlia)
Answer: Q2 will be higher than Q1; hardware shipment visibility points to delivery at the beginning of Q2, enabling milestone realization and return to original project schedule between Q2-Q3. No margin impact factored for pricing/memory issues - it's a known sector-wide issue the client is conscious of. (Venu Lambu)

Middle East Exposure

Question: What is Middle East revenue share and is the geopolitical issue behind? (Sandeep Shah)
Answer: Less than 3% of revenue. Geopolitical risk remains inherently unpredictable, but North America traction, top 10 client pipeline, and growth verticals position the company well. (Venu Lambu)

Margin Walk & Outlook

Question: Can you quantify the Q4 to Q1 margin walk and BFSI margin improvement? (Girish Pai)
Answer: 40 bps QoQ improvement = New Horizons operational efficiencies + forex, offset partly by ~1% wage hike. Forex and wage hike broadly cancelled out; net improvement attributable to operational efficiencies. BFSI margin improvement driven by revenue growth returning and utilization gains. (Vipul Chandra)
Question: Will H2 margins face headwinds from Randstad consolidation? (Sandeep Shah)
Answer: No significant margin impact expected - deal has three components with two contributing savings and incremental profits. Organic margin continues to expand; buffers being created. Similar margins as last year or better expected. (Vipul Chandra)

Randstad Integration & Margin Trajectory

Question: Ex-Randstad, margin expansion was assumed - should we continue to assume that including the business? (Vibhor Singhal)
Answer: Yes - organic margin expansion continues. Mathematical impact from amortization will come, but buffers and contributions from the other two deal legs should ensure no margin degrowth versus last year. Synergy benefits may take 1-2 quarters to play out. (Vipul Chandra)

FDE & Hyperscaler/AI Lab Ecosystem

Question: How do you compete with hyperscaler FDE armies (e.g., Microsoft's 6,000 FDEs with $2-3B investment)? (Girish Pai, Sumeet Jain)
Answer: Market has shifted from AI creation to AI deployment. Global FDE supply is only a few thousand, far below demand. Hyperscalers are partners, similar to the cloud journey. LTM is one of the largest Copilot users, works with Google Gemini and AWS. Strategic partnership with one AI lab in final stages. (Venu Lambu)

Voicing.AI & Uniphore Investments

Question: What are the mechanics of the Voicing.AI fair value gain and Uniphore investment? (Sushovan Nayak, Dipesh Mehta)
Answer: Voicing.AI - conversion of SAFE instruments into preferred stock/equity triggered first-time fair value recognition through P&L; future changes through OCI. Stake increased via incremental warrants. Uniphore - strategic investment in their fundraising round to strengthen SLM platform partnership; amounts not disclosed due to private round constraints. (Vipul Chandra, Venu Lambu)

AI 1000 & AI Revenue Mix

Question: What is the timeline for AI 1000 and how does it change positioning? (Rahul Jain)
Answer: First-mover initiative to train 1000+ FDEs; majority of skilling between Q2-Q3 with domain orientation in parallel; some already on client projects. Initial cohort spans first two quarters. A decent FDE number, not 20,000-30,000, can create significant adoption impact. (Venu Lambu)
Question: Which AI work type has the biggest potential? (Rahul Jain, Girish Pai)
Answer: Business AI is the largest piece, followed by Industrial AI and Creative AI (though Creative could outperform on adoption ease). Business AI addresses CFO/CEO agenda, Creative AI the CMO budget, Industrial AI manufacturing/supply chain leadership. Enterprise AI is embedded everywhere and intentionally not separately quantified. (Venu Lambu)

Order Book Path to USD 2 Billion

Question: What will it take for deal wins to reach USD 2 billion+? (Hasmukh Vakharia)
Answer: The USD 1.7 billion order book is not directly comparable to last year - natural deflation adjustment means more work delivered for the same order book value. Order book kept steady despite new AI price points and macro headwinds. Large deal pipeline strong; consistency preferred over one-off spikes. Discretionary spend expected to improve in H2. (Venu Lambu)

Employee Restructuring

Question: If rupee tailwind fades, would employee restructuring be needed to sustain margins? (Anmol Garg)
Answer: New Horizons is about conquering new horizons, not reducing employees. Margin gains come from smart workforce deployment (mature utilization), tightened operational controls, and internal AI adoption across HR, finance, talent supply chain, and marketing - showcased to customers as AI proof points. (Venu Lambu)

Key Takeaway

LTM Limited opened FY2027 with Q1 revenue of USD 1,224 million, up 0.3% QoQ and 6.4% YoY in constant currency, while EBIT margins expanded 40 bps sequentially to 15.5% despite wage hikes, driven by New Horizons operational efficiencies. Business, Creative, and Industrial AI revenue reached a ~USD 150 million quarterly run rate, with BlueVerse™ Voicing completing 17 client implementations in 12 months and AI 1000 building a 1,000+ Forward Deployed Engineer pipeline. Financial Services (+3.2% QoQ) and Tech & Services (+3.4% QoQ, +10% YoY) led segment growth; Consumer (-0.7% QoQ) and Production (-5.7% QoQ) declines were tied to transient seasonal, hardware shipment, and Middle East factors expected to reverse in Q2. Management guided organic growth to accelerate through Q2 into H2 with FY2027 growth above FY2026's 6% CC base and continued margin expansion, supported by a strong order book and completion of top-client productivity transitions. Key watch points include Middle East geopolitics (<3% revenue), India hardware supply normalization, subcon absorption from vendor consolidation deals, and Randstad integration timing with closure expected at Q3 start.