Can LTM’s pivot towards shorter-tenure AI deals accelerate revenue growth in H2?
LTM had promised a growth uptick from the September quarter (Q2FY27), but the 1.1% sequential constant currency (CC) revenue improvement was unsatisfactory. The drag came from seasonality in the technology and services vertical and its Saudi Arabian joint ventures, which reduced sequential growth by 60-70 basis points (bps).
The company has strategically shifted the deal mix towards shorter-tenure artificial intelligence (AI) projects as it aspires for a better H2FY27. H2 is poised to be buoyed by AI-led deals, recovery in client accounts and the Randstad Technology and Consulting Services acquisition (approvals on track for Q3FY27).
AI deals have six-12 months duration and enable faster revenue conversion than traditional large IT deals with long transition periods. The former are also gross-margin accretive.
LTM eyes CC year-on-year growth of 5.3% in FY27—similar to FY26. But order inflow fell 25% sequentially and 21% year-on-year in Q2 to a multi-quarter low of $1.26 billion, clouding near-term revenue visibility.
LTM attributed this drop to a change in mix. AI revenue grew 40% year-on-year to 13.4% of Q2 revenue. A significant portion of the orders comprised annual contract value (ACV)-based deals.
The pipeline is healthy, but LTM hasn’t shared the ACV-total contract value (TCV) split. ACV measures the average revenue generated by a single contract over a 12-month period, while TCV gauges total revenue over the entire contract duration.
The absence of a disclosed ACV versus traditional TCV split makes it difficult to assess the quality and revenue visibility of bookings, said Nirmal Bang Institutional Equities. LTM may provide an ACV split from the next quarter.
Randstad acquisition
The Ebit (earnings before interest and tax) margin rose 10 bps sequentially to 15.6%, lagging the consensus estimate of 15.8%. The Randstad acquisition could have an amortization-related margin impact in Q4FY27.
Dolat Capital noted that West Asia is proving to be a significant pain point for LTM as the rest of the world is just about 10% of the revenue mix, but the impact has weighed heavily on Q2 and is likely to have similar effects in H2.
Amid lingering growth woes, LTM’s shares declined over 1% on Monday, taking the fall so far in 2026 to almost 30%, underperforming the Nifty IT index. The stock trades at 19 times FY28 estimated earnings, Bloomberg data showed.