LTTS margin expands as AI-led large deals cross USD 200 million in September quarter

L&T Technology Services Ltd reported a sharper improvement in profitability in the quarter ended September 30, 2026, as its Engineering Intelligence strategy and a favourable business mix helped offset continued weakness in its Tech segment and Europe.

Revenue rose 12.1 per cent year-on-year to Rs 3,040.4 crore and increased 3.4 per cent sequentially. In dollar terms, revenue was USD 317.1 million, up 2.3 per cent quarter-on-quarter. Constant-currency revenue growth was stronger at 2.7 per cent sequentially and 4.8 per cent year-on-year, indicating that operational growth was ahead of reported dollar revenue growth.

The more notable improvement came in margins. EBITDA increased 23.5 per cent year-on-year to Rs 585.8 crore, lifting the EBITDA margin to 19.3 per cent from 17.5 per cent a year earlier. EBIT rose 29.8 per cent to Rs 496.6 crore, while the EBIT margin expanded by 220 basis points year-on-year and 60 basis points sequentially to 16.3 per cent.

The margin progression takes LTTS closer to its five-year aspiration of delivering 13 per cent to 15 per cent revenue compound annual growth with EBIT margins of 16 per cent to 17 per cent. The company had reported an EBIT margin of 15.7 per cent in the June quarter, making the latest sequential expansion significant for a business that is seeking to shift from conventional engineering services towards AI-enabled, platform-led engagements.

Net income rose 66.8 per cent year-on-year to Rs 548.2 crore. However, the reported profit included a one-time gain of Rs 165 crore from the disinvestment of the Smart World and Communication business. Net income from continuing operations increased 19.7 per cent year-on-year to Rs 379.6 crore, offering a clearer measure of underlying earnings growth.

Large-deal total contract value wins exceeded USD 200 million during the quarter, with AI-related contracts accounting for more than half of the total. The wins included a USD 75 million contract, one deal above USD 30 million, one worth USD 25 million and six deals exceeding USD 10 million each. The deal flow follows large-deal wins of more than USD 850 million in FY2026, although contract wins will translate into revenue over their respective execution periods.

Sustainability remained the main growth engine, with revenue rising 13.4 per cent year-on-year and 4.9 per cent sequentially. The segment accounted for 38 per cent of quarterly revenue, up from 37.1 per cent in the June quarter. Mobility, which represented 32.3 per cent of revenue, grew 4.7 per cent year-on-year and 2.3 per cent sequentially. Tech, at 29.7 per cent of revenue, declined 8.5 per cent year-on-year and 0.9 per cent sequentially, underlining that the portfolio is becoming increasingly weighted towards Sustainability and Mobility.

North America, which contributed 60.7 per cent of revenue, grew 4.4 per cent year-on-year. Europe accounted for 17.7 per cent and declined 3.9 per cent, reflecting the slower demand environment that management had earlier highlighted in parts of the region.

LTTS said annualised revenue from Engineering Intelligence-led solutions reached USD 120 million. It also launched an Engineering Intelligence Lab with NVIDIA to develop physical AI-native applications for manufacturing, robotics and supply chains. Its EIOne platform now includes more than 100 solutions across engineering, products, manufacturing and operations.

Chief executive officer Amit Chadha said improving backlog and pipeline, alongside several large deals under consideration, should strengthen revenue momentum in the second half while allowing the company to sustain healthy EBIT margins. The key execution test will be converting this pipeline, particularly amid uneven client decision-making and softer European demand.

The company declared an interim Dividend of Rs 20 per share, with October 27, 2026, set as the record date. As of 9:50 am on October 21, 2026, LTTS shares were trading at Rs 4,021.05, up 11.39 per cent from the previous close. Despite the rise, the stock remained about 14.3 per cent below its 52-week high of Rs 4,693.55 and had declined 16.07 per cent over one year, compared with a 6.91 per cent fall in the BSE 500.

Disclaimer: The article is for informational purposes only and not investment advice.