LTTS Q2 profit jumps on SWC sale gain as margins and large deals strengthen

L&T Technology Services Ltd reported improved revenue momentum and stronger profitability in the second quarter of FY27, supported by growth in its Sustainability and Mobility businesses, better operating leverage and a healthy large-deal conversion pipeline.

Consolidated revenue rose 12.1 per cent year-on-year and 3.4 per cent sequentially to Rs 3,040.4 crore. In constant currency terms, revenue increased 4.8 per cent year-on-year and 2.7 per cent quarter-on-quarter, while dollar revenue stood at USD 317.1 million.

Reported net income surged 66.8 per cent year-on-year and 53.7 per cent sequentially to Rs 548.2 crore. However, the headline profit included a one-time capital gain of Rs 165 crore from the disinvestment of the Smart World and Communication, or SWC, business. Net income from continuing operations was Rs 379.6 crore, up 19.7 per cent year-on-year and 7.9 per cent sequentially, indicating that underlying earnings growth was more moderate but still ahead of revenue growth.

The quarter’s key operating feature was margin expansion. EBITDA rose 23.5 per cent year-on-year to Rs 585.8 crore, taking the EBITDA margin to 19.3 per cent from 17.5 per cent a year earlier and 18.7 per cent in the preceding quarter. EBIT increased 29.8 per cent year-on-year to Rs 496.6 crore, with margin improving by 220 basis points year-on-year and 60 basis points sequentially to 16.3 per cent.

The margin improvement is important because it moves LTTS closer to its stated five-year EBIT-margin aspiration of 16 per cent to 17 per cent. Management has attributed the improvement to portfolio mix, Engineering Intelligence-led productivity, operating discipline and growth in higher-margin businesses.

Sustainability remained the principal growth engine, posting revenue growth of 13.4 per cent year-on-year and 4.9 per cent sequentially. The segment has benefited from engineering demand linked to industrial automation, plant modernisation, energy transition and manufacturing operations. Mobility revenue increased 4.7 per cent year-on-year and 2.3 per cent sequentially, while Tech revenue declined 8.5 per cent year-on-year and 0.9 per cent sequentially.

The weaker Tech performance remains a watchpoint, particularly after it had been a major contributor to growth in FY26. Management had earlier linked the softness to programme completion and delays in replacement programme ramp-ups, rather than broad-based weakness across the portfolio. Europe also continued to lag, with revenue from the region declining 3.9 per cent year-on-year. North America, which accounted for 60.7 per cent of quarterly revenue, grew 4.4 per cent year-on-year.

Large-deal wins provided greater visibility for the second half. LTTS recorded total contract value of more than USD 200 million during the quarter, compared with nearly USD 100 million of large-deal wins in Q1 FY27. AI-led engagements accounted for more than half of the latest quarter’s deal value. The company won a USD 75 million contract, another deal above USD 30 million, a USD 25 million engagement and six deals valued at more than USD 10 million each.

Chief Executive Officer and Managing Director Amit Chadha said the improving order backlog and deal pipeline should support stronger revenue momentum in the second half while allowing the company to sustain healthy EBIT margins. LTTS has also launched an Engineering Intelligence Lab with NVIDIA to develop physical AI applications for manufacturing, robotics and supply chains. Its AI patent filings have exceeded 250, while total patent filings have crossed 1,800.

The board declared an interim Dividend of Rs 20 per share, with October 27, 2026, set as the record date.

As of 3:44 PM on October 21, 2026, the stock was trading at Rs 3,982.60, up 10.33 per cent from its previous close. The share price was about 15.2 per cent below its 52-week high of Rs 4,693.55. Despite the latest move, the stock has declined 16.07 per cent over the preceding year, underperforming the BSE 500’s 6.91 per cent decline by about 9.16 percentage points.

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