💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, revenue growth was led by Healthcare, Life Sciences & Public Services at 10.2% QoQ and Consumer Business at 9.1% QoQ. Manufacturing & Resources grew 1.7% QoQ, while Banking, Financial Services & Insurance (BFSI) grew 0.2% QoQ. Technology, Media & Communications saw a marginal growth of 0.1% QoQ. On a YoY basis, Manufacturing & Resources grew 12.7% and Consumer Business grew 12.4%.

Geographic Revenue Split

North America remains the dominant region contributing 74.2% of total revenue as of Q2 FY26, growing 2.1% QoQ. Other regions were not specifically broken down by percentage in the latest quarterly update, though historical data shows North America consistently above 70%.

Profitability Margins

Operating margin (EBIT) stood at 15.9% in Q2 FY26, reflecting a significant expansion of 160 basis points from 14.3% in Q1 FY26. Net profit margin for FY23 was 13.3%, down from 15.1% in FY22. The company aims to sustain operating margins in the 17-18% range over the medium term through improved utilization and offshore delivery.

EBITDA Margin

EBIT margin expanded to 15.9% in Q2 FY26, a 13.0% increase in absolute EBIT value YoY to INR 1,648.1 Cr. This improvement was driven by operational efficiencies and integration synergies following the LTI and Mindtree merger.

Capital Expenditure

Annual cash accruals of over INR 4,000 Cr are expected to cover incremental working capital and small-ticket acquisitions. The company maintains a near debt-free balance sheet with cash and investments of INR 13,999.5 Cr as of September 30, 2025, up from INR 12,835.3 Cr in the previous quarter.

Credit Rating & Borrowing

LTIM holds a CRISIL AAA/Stable rating. Borrowing costs are minimal as the company is nearly debt-free, with bank debt of only INR 144 Cr against a net worth of INR 18,064 Cr as of late 2023. Interest coverage ratio was robust at 44.3 times in FY23.

⚙️ Operational Drivers

Raw Materials

As an IT services firm, the primary 'raw material' is human capital, with employee benefit expenses representing the largest cost component. The company employs 86,000+ professionals.

Import Sources

Talent is primarily sourced from India (offshore delivery centers in Mumbai, Pune, Bengaluru, Chennai) and onsite locations in the US, Canada, Europe, and Singapore.

Key Suppliers

Not applicable for IT services; however, key technology partners include major cloud and software providers used in digital transformation projects.

Capacity Expansion

Current capacity is defined by a workforce of 86,000+ professionals. Expansion is driven by recruitment and reskilling, such as the GenAI Foundation Training Program completed by 80,000+ employees to enable AI-centric delivery models.

Raw Material Costs

Employee costs are the primary driver; margins were impacted by a 14.2% attrition rate (TTM) and utilization levels of 88.1%. Integration costs from the merger also temporarily pressured margins by approximately 100-150 bps.

Manufacturing Efficiency

Utilization (excluding trainees) was flat at 88.1% in Q2 FY26. Higher utilization directly improves EBIT margins by spreading fixed employee costs over a larger revenue base.

Logistics & Distribution

Not applicable; services are delivered digitally or onsite at client locations.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

Growth is targeted through 'mining' the top 749 active clients, increasing the count of $100M+ and $50M+ accounts, and leveraging the L&T brand for large-scale digital transformation deals. The company signed USD 1.59 billion in new orders in Q2 FY26, a 22% increase YoY.

Products & Services

IT services including application development, maintenance, enterprise solutions, infrastructure management, testing, analytics, and AI-centric digital transformation.

Brand Portfolio

LTIMindtree, L&T (Parent Brand).

New Products/Services

AI-centric delivery models and GenAI-integrated solutions are expected to drive future growth, with 80,000+ employees already trained in GenAI foundations.

Market Expansion

Expansion is focused on cross-selling services to the existing 700+ clients and increasing penetration in the European and Middle Eastern markets to balance geographic concentration.

Market Share & Ranking

6th largest IT services player in India following the merger of LTI and Mindtree.

Strategic Alliances

Strategic partnership with a global financial institution for end-to-end technology consulting and a large deal with a global media company for AI-centric delivery.

🌍 External Factors

Industry Trends

The industry is shifting toward AI and digital transformation. LTIM is positioning itself as a 'Full Stack digital powerhouse' to capture the 4.4% YoY growth in constant currency revenue seen in the latest quarter.

Competitive Landscape

Intense competition from both domestic giants (TCS, Infosys) and global MNCs (Accenture, IBM) expanding their offshore presence in India.

Competitive Moat

The moat is built on the L&T brand heritage, which provides better market penetration, and the scale of being the 6th largest Indian IT firm. This scale allows LTIM to bid for 'mega-deals' that smaller players cannot access.

Macro Economic Sensitivity

Revenue growth has remained slow (7% in 9M FY25) due to prolonged macro-economic challenges affecting client discretionary spend in the IT sector.

Consumer Behavior

Clients are increasingly demanding AI-integrated delivery and consolidated vendor portfolios, favoring larger players like LTIM post-merger.

Geopolitical Risks

High exposure to North America (74.2%) makes the company vulnerable to US trade policies and immigration law changes.

⚖️ Regulatory & Governance

Industry Regulations

Subject to international data privacy laws (GDPR) and US H1-B visa regulations, which dictate the cost and mobility of the workforce.

Environmental Compliance

Targeting Net Zero by 2040. In FY24, 44.34% of energy was from renewable sources, reducing carbon footprint and potential future carbon tax liabilities.

Taxation Policy Impact

Effective tax rate is reflected in the PAT margin of 13.3%. Income tax expense for the six months ended Sept 30, 2025, was INR 969.6 Cr.

Legal Contingencies

No specific pending court case values in INR were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

A sustained fall in operating margins below 14% is a key downward rating sensitivity factor that would adversely impact cash flow.

Geographic Concentration Risk

74.2% of revenue is concentrated in North America, creating a high dependency on a single economy's IT spending cycles.

Third Party Dependencies

Dependency on the L&T parent for brand and treasury support; a change in the parent's strategic focus toward services would be a risk.

Technology Obsolescence Risk

Risk of falling behind in the AI race; mitigated by training 80,000+ staff in GenAI to ensure service relevance.

Credit & Counterparty Risk

DSO of 82 days indicates stable receivables quality; the company maintains a high cash surplus of INR 13,999.5 Cr to buffer against credit shocks.