L&T Technology Services Limited — Q1 FY27 earnings call

Call held 14 Jul 2026

Management summary

L&T Technology Services reported a strong Q1 FY27 with healthy revenue growth and significant EBIT margin expansion, driven by robust performance in Sustainability and recovering Mobility segments. The company secured nearly $100 Mn in large deal TCV wins and maintained strong free cash flow. While the Tech segment faced some headwinds and Europe showed moderation, management expressed confidence in sequential growth and continued margin improvement, underpinned by their 'Engineering Intelligence' strategy and strategic partnerships.

Highlights

  • Revenue grew to ₹2,940 crores (11.5% YoY, 2.9% QoQ) and $309.9 Mn (1.9% YoY, 1.5% QoQ CC basis), demonstrating healthy quarterly growth.

  • EBIT margin expanded by 50 bps QoQ and 200 bps YoY to 15.7%, driven by operational discipline and strategic actions.

  • Sustainability segment continued strong growth at 4.3% QoQ and 11.3% YoY, maintaining high margins of 29.1%.

  • Mobility segment showed encouraging recovery with 2.3% sequential growth, supported by investments in EV, hybrid, and SDV.

  • Recorded large deal TCV wins of nearly $100 Mn in Q1, with a healthy pipeline for larger engagements.

  • Free cash flow was robust at ₹540 crores, representing 153% of net income, and combined DSO improved to 77 days from 83 days in Q4.

Concerns

  • Tech segment showed softer revenue performance and a slight moderation in Europe during the quarter, with margins at 11.5%.

  • A particular medical program in MedTech concluded, and the start of another was temporarily delayed, impacting Tech segment growth.

  • Other income was lower compared to the previous quarter, primarily due to forex losses, and is expected to remain in that range for a few quarters.

Key financials

  1. Revenue ₹2,940 Cr +11.5%YoY
  2. Revenue (USD) 309.9 Mn +1.9%YoY
  3. EBIT Margin 15.7%
  4. Net Income ₹352 Cr +17.4%YoY
  5. EPS ₹33.17
  6. Effective Tax Rate 26%
  7. Combined DSO 77 days
  8. Free Cash Flow ₹540 Cr
  9. Cash and Investments ₹3,394 Cr
  10. Headcount 23,845
  11. Attrition 14.7%
  12. Offshore Mix 53.9%
  13. T&M Revenue Mix 64.9%

What they filed

Q1 FY27: revenue up 11.4%, net profit up 13.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,573 2,653 2,638 2,638 2,980 +16%2,787 +5%2,858 +8%2,940 +11%
EBITDA466 495 433 441 491 +5%498 +1%521 +20%548 +24%
Net profit320 320 310 316 329 +3%303 −5%333 +7%357 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Mobility
    2.3% Sequential Growth15.6% EBIT Margin
  • Sustainability
    4.3% QoQ Growth11.3% YoY Growth29.1% EBIT Margin
  • Tech
    11.5% EBIT Margin

Order book

high confidence

Inflow this quarter

$100 Mn

Pipeline

deal pipeline tcv

Healthy pipeline of large opportunities, including a significant telecom deal and other medical domain deals.

Cancellations & deferrals

  • deferred: A few large deal wins that were supposed to close in Q1 moved to early part of Q2.
  • deferred: A particular medical program concluded, and the start of another was temporarily delayed.
Management is confident of closing even larger engagements in the coming quarters and sees a healthy pipeline across sectors.

Source: Prepared remarks

Capital allocation

high confidence
  • Liquidity Cash ₹3,394 Cr Cash and investments stood at ₹3,394 crores at the end of Q1 FY27, compared to ₹3,555 crores at the end of Q4 FY26.
    Cash and investments stood at 3,394 crores at the end of Q1 FY27 compared to 3,555 crores at the end of Q4 FY26.

Guidance & targets

Revenue Growth

  • CAGR for revenue Revenue Growth · next 5 years · High confidence 13-15%
    Finally, looking ahead, we remain committed to our aspiration of delivering 13-15% CAGR over the next 5 years while maintaining EBIT margins of 16-17%

    — Amit Chadha

  • Sequential growth Revenue Growth · Q2 · High confidence growth
    I can commit to you growth in Q2.

    — Amit Chadha

Profitability

  • EBIT margins Profitability · next 5 years · High confidence 16-17%
    Finally, looking ahead, we remain committed to our aspiration of delivering 13-15% CAGR over the next 5 years while maintaining EBIT margins of 16-17%

    — Amit Chadha

  • EBIT margin Profitability · on or before Q4 FY27 · High confidence mid-16%
    With that, we remain on track towards our aspiration of achieving a mid-16% EBIT margin on or before Q4 FY27.

    — Rajeev Gupta

  • EBIT margins Profitability · throughout the year · High confidence sequential improvement
    We continue to expect sequential improvement in EBIT margins throughout the year, resulting from 3 factors:

    — Rajeev Gupta

Tax Rate

  • Effective Tax Rate (ETR) Tax Rate · going forward · High confidence 26.2% to 26.7%
    We expect ETR to remain in the range of 26.2% to 26.7%.

    — Rajeev Gupta

Working Capital

  • Combined DSO Working Capital · going forward · High confidence 80 to 85 days
    Going forward, we expect combined DSO to remain in the range of 80 to 85 days.

    — Rajeev Gupta

Cash Flow

  • Free Cash Flow (as % of net income) Cash Flow · annual · High confidence 90% plus
    See as far as the cash flow, I think I've always guided that we will deliver free cash flows in the range of 90% plus.

    — Rajeev Gupta

  • Free Cash Flow (as % of net income) Cash Flow · annual · Medium confidence 90% to 95%
    While we will attempt to do as well as we did in this quarter, but you try to keep it between 90% to 95%, that is for certain that we can deliver for the year.

    — Rajeev Gupta

Segment Growth

  • Mobility and Tech segment growth Segment Growth · this financial year · Medium confidence grow
    But as I look forward, I do believe Mobility and Tech as 2 segments will also grow in this financial year.

    — Amit Chadha

  • Tech segment growth Segment Growth · from Q2 onwards · High confidence return to growth
    We expect this segment to return to growth from Q2 onwards.

    — Amit Chadha

Market context

  • Sustainability segment growth Segment Growth · current financial year, FY27 · High confidence double-digit
    And I had said this during Q4 as well, that I expect Sustainability to grow double-digit in the current financial year, FY27, and you are seeing that play out.

    — Amit Chadha

What to watch in Q2 FY27

Tech Segment Growth

from Q2 onwards
Current Softer revenue performance in Q1
Target Return to growth

Why it matters

Indicates recovery and contribution from a key segment after Q1 headwinds.

We expect this segment to return to growth from Q2 onwards.

Risks & concerns

  • Moderation in Europe market

    medium

    Europe demonstrated slight moderation during the quarter, attributed to market dependencies on Asia and China, and seasonal vacations.

    Management acknowledged

  • Delay in medical programs

    low

    One MedTech program concluded, and another's start was temporarily delayed, impacting the Tech segment's Q1 performance.

    Management acknowledged

  • Forex losses impacting other income

    low

    Other income was lower due to forex losses and is expected to remain in that range for a few quarters.

    Management acknowledged

  • Deal closures pushed to next quarter

    low

    A few large deal wins expected in Q1 moved to early Q2, impacting Q1 reported TCV.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Mobility & Sustainability Growth Differentiators Direct
So, one, if you look at Ravi, we've invested in advance like Rajeev talked about, Alind talked about, in Engineering Intelligence, that allows us to continue to have new deal wins and ramp-ups for the deal wins that were done throughout last year in Sustainability.

Analysts questioned LTTS's strong performance in Mobility and Sustainability compared to peers, and management attributed it to strategic investments in Engineering Intelligence (EI), EV, hybrid, and SDV.

Asked by Ravi Menon

AI and Large Deal Transition in ER&D Direct
So, AI is a central part of the transformation theme, which is there. And to say that you take any process. And if you're not putting that thought process in there and the solution that we have built around engineering intelligence in there, it's not going to come to fruition.

Analyst inquired if ER&D would see large AI-driven deal transitions like IT services, and if LTTS could own IP for pricing benefits, to which management detailed their AI-centric approach and consultative role.

Asked by Vibhor Singhal

Free Cash Flow Sustainability Partial
While we will attempt to do as well as we did in this quarter, but you try to keep it between 90% to 95%, that is for certain that we can deliver for the year.

Analyst questioned if the exceptionally high 153% FCF to net income was sustainable, and management clarified their target range is 90-95% but they will strive for higher.

Asked by Vibhor Singhal

Europe Auto Segment Demand Direct
Europe, because they were depending on Asia and China for a significant part of their market, which seems to have been vanishing over the last few quarters. You must have read this in the commentary from all the OEMs, there is a challenge, right?

Analyst asked about demand in the Europe auto segment, and management explained the challenges due to market dependencies but highlighted LTTS's competitive advantage and diversification.

Asked by Sandeep Shah

Q2 Growth Momentum Evasive
I will not comment on that because we are providing a five-year outlook, and we are committing to you growth every quarter, but we are shying away and not providing annual

Analyst pressed for specific Q2 growth momentum, but management declined to provide it, reiterating their commitment to sequential growth without specific numbers.

Asked by Sandeep Shah

Tech Segment Share and Structural Shift Direct
So, Jyoti, let me add to what Amit said. There are 2 parts to this. One, you are aware of it that we did portfolio rationalization in Q4 with our Smart World business, right? ... I think you will see more of Sustainability and Mobility followed by Tech.

Analyst questioned if the Tech segment's reduced revenue share was a structural shift, and management confirmed it was partly due to portfolio rationalization and stronger growth in other segments.

Asked by Jyoti

Telecom Deal as Growth Driver for Tech Direct
It's a significant deal. And hopefully, if all goes well, like Rajeev alluded and Alind alluded, we should be able to announce it in the early part of Q2, and the ramp-up will start immediately.

Analyst inquired about a significant telecom deal in the pipeline, and management confirmed its importance and expected closure in early Q2, indicating a potential boost for the Tech segment.

Asked by Karan Uppal

Client Conversations & Geopolitics/AI Impact Direct
most of the client conversations are still shielded from a war standpoint, right? Still conversations around, how do we increase market share, how do we make products more viable? How do we improve our products experience with our customers?

Analyst asked about the impact of geopolitics on client conversations and AI's positive/negative potential, to which management stated conversations remain focused on business value and LTTS is helping clients navigate AI adoption.

Asked by Bhavik Mehta

2 min read 6 chapters

Detailed narrative

Q1 FY27 Performance Overview and Strategic Direction

L&T Technology Services reported a strong Q1 FY27, with revenue reaching $309.9 Mn (1.9% YoY CC) and ₹2,940 crores (11.5% YoY). The company achieved a significant EBIT margin expansion of 50 bps QoQ and 200 bps YoY, reaching 15.7%. This performance is attributed to strategic actions under the Lakshya 31 plan and continued investments across Six Technology Bets, particularly in Engineering Intelligence. Management reiterated its commitment to a 13-15% CAGR for revenue over the next 5 years while maintaining EBIT margins of 16-17%.

Segmental Performance: Mobility, Sustainability, and Tech

The Mobility segment showed encouraging recovery with 2.3% sequential growth, driven by broad-based performance across Aerospace & Rail and Trucks & Off-Highway. Sustainability, the most profitable segment, continued its strong growth trajectory with 4.3% QoQ and 11.3% YoY, achieving margins of 29.1%. The Tech segment, however, experienced softer revenue performance, leading to its margins being 11.5%. Management expects Tech to return to growth from Q2 onwards and anticipates double-digit growth for Sustainability in FY27.

Engineering Intelligence (EI) and Innovation Milestones

LTTS's Engineering Intelligence solutions are opening strategic client conversations and contributing to a healthy pipeline. The company announced a strategic partnership with Anthropic to integrate Claude models across engineering processes and AI-powered platforms. Key milestones in Q1 included the inauguration of Europe's first Engineering Intelligence Center in Munich, the launch of Ainfonix for process industry clients, and an increase in AI patents to 244, contributing to a total patent count of 1,757. These initiatives are central to improving engineering productivity and speed to market.

Large Deal Wins and Pipeline Health

In Q1 FY27, LTTS recorded large deal TCV wins of nearly $100 Mn. While some large deals expected in Q1 moved to early Q2, management expressed confidence in closing even larger engagements in the coming quarters, citing a strengthening pipeline. The company's focus on fixed-price and outcome-based engagements, coupled with its EI capabilities, is helping secure new deals and drive productivity improvements for clients.

Financial and Operational Efficiency

The company demonstrated strong financial discipline, with free cash flow at ₹540 crores, representing 153% of net income. Combined DSO improved to 77 days from 83 days in Q4, with billed DSO at 57 days. Headcount remained steady at 23,845, and attrition was range-bound at 14.7%. The offshore mix stood at 53.9%. Other income was impacted by forex losses, leading to a net of ₹14.7 crores, and is expected to remain in a similar range for the next few quarters.

Market Dynamics and Client Engagement

North America continued to grow sequentially, while Europe experienced slight moderation. Management noted that client conversations are increasingly focused on leveraging AI for end-to-end transformation, market share increase, and product viability, rather than being significantly impacted by geopolitics. LTTS's differentiated engineering capabilities and lower cost base position it favorably in a competitive environment, particularly in Europe where vendor consolidation opportunities are emerging.

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