L&T Technology Services (LTTS) Q3FY26 Performance Report: Revenue Down by 2.8% QoQ
By Prime Research | Updated at: Jan 16, 2026 03:31 PM IST
Restructuring Dents Growth; Focus on Quality
L&T Technology Services (LTTS) reported a muted Q3FY26 performance with revenue down 2.8% QoQ in CC terms, missing expectations largely due to a 9.8% QoQ decline in the Tech vertical amid ongoing business restructuring. The company is rationalizing its portfolio by exiting lower-margin, commoditized offerings in regional markets such as India and Israel and focusing instead on high-growth, profitable segments. The outlook for the Sustainability segment remains strong, supported by a healthy deal pipeline and execution of previously secured large contracts. The Mobility vertical is showing early signs of recovery, aided by substantial deal wins (~50% of large deals) and the growing adoption of AI-led solutions.
LTTS is currently reassessing its existing portfolio ahead of launching its five-year growth strategy, Lakshya, from April 2026. As part of this roadmap, the company is targeting mid-teen (~16%) EBIT margins by the end of FY27E. Given the ongoing restructuring through Q4, management has guided for mid-single-digit growth for FY26E, implying a softer Q4 versus typical seasonality. While near-term growth remains subdued due to portfolio pruning, the sharpened focus on high-value offerings and disciplined execution should position LTTS for accelerated and profitable growth in the medium term. Incorporating the impact of business rationalization, we trim our earnings estimates by 3–4% for FY27/FY28E. We maintain ADD on LTTS with a revised TP of INR 5,250, based on 28x Mar-28E EPS.
- Q3FY26 highlights:(1) LTTS posted revenue of USD 326mn, lower than our estimate of USD 340mn, -2.8% QoQ and +3.9% YoY in CC terms.(2) The sustainability vertical grew +1.7% QoQ, driven by ramp-up of large deals won earlier; mobility grew +0.5% QoQ despite furloughs while hi-tech declined -9.8% QoQ due to rebalancing of business.(3) LTTS recorded its fifth consecutive quarter of USD 200mn+ large deal TCV bookings in Q3FY26, with half of the wins in the mobility vertical.(4) EBITM, at 14.6% (above our estimate of 14.3%), improved 124bps QoQ, driven by improved revenue mix, cost efficiencies, and FX tailwinds. LTTS aspires to reach 16.5% EBITM by Q4FY27–Q1FY28E.(5) LTTS expects mid-single-digit overall growth in FY26E, with double-digit growth expected in focus areas.
- Outlook: We have factored in USD revenue growth of 5.5/10.5/13% for FY26/27/28E respectively, implying a CQGR of -1.1/4.3/5.2% for the three years. EBITM is factored in at 13.8/15/16% for FY26/27/28E, resulting in an EPS CAGR of 16.1% over FY25–28E.
Quarterly Financial Summary
| YE Mar (INR bn) | Q3 FY26 | Q3 FY25 | YoY (%) | Q2 FY26 | QoQ (%) | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (USD mn) | 326 | 312 | 4.6 | 337 | (3.2) | 1,164 | 1,259 | 1,328 | 1,468 | 1,659 |
| Net Sales | 29.24 | 26.53 | 10.2 | 29.80 | (1.9) | 96.47 | 106.70 | 117.20 | 131.36 | 150.15 |
| EBIT | 4.27 | 4.22 | 1.2 | 3.98 | 7.3 | 16.47 | 15.87 | 16.19 | 19.65 | 24.02 |
| APAT | 3.11 | 3.22 | (3.5) | 3.29 | (5.4) | 13.04 | 12.66 | 13.31 | 16.28 | 19.81 |
| Diluted EPS (INR) | 29.4 | 30.5 | (3.5) | 31.1 | (5.4) | 123.5 | 119.9 | 126.1 | 154.3 | 187.7 |
| PE (x) | – | – | – | – | – | 34.4 | 35.4 | 33.7 | 27.5 | 22.6 |
| EV / EBITDA (x) | – | – | – | – | – | 22.0 | 22.4 | 21.1 | 17.4 | 14.1 |
| RoE (%) | – | – | – | – | – | 25.4 | 22.2 | 20.7 | 22.7 | 24.3 |
Change in Estimates
| YE March (INR bn) | FY26E Old | FY26E Revised | Change (%) | FY27E Old | FY27E Revised | Change (%) | FY28E Old | FY28E Revised | Change (%) |
|---|---|---|---|---|---|---|---|---|---|
| Revenue (USD mn) | 1,377 | 1,328 | (3.5) | 1,539 | 1,468 | (4.6) | 1,705 | 1,659 | (2.7) |
| Revenue | 121.37 | 117.20 | (3.4) | 137.70 | 131.36 | (4.6) | 154.35 | 150.15 | (2.7) |
| EBIT | 16.82 | 16.19 | (3.7) | 20.61 | 19.65 | (4.7) | 24.77 | 24.02 | (3.0) |
| EBIT margin (%) | 13.9 | 13.8 | -4bps | 15.0 | 15.0 | -1bps | 16.0 | 16.0 | -5bps |
| APAT | 13.79 | 13.31 | (3.5) | 16.96 | 16.28 | (4.0) | 20.33 | 19.81 | (2.6) |
| EPS (INR) | 130.7 | 126.1 | (3.5) | 160.8 | 154.3 | (4.0) | 192.6 | 187.7 | (2.6) |
Source: Company, HSIE Research
Rating Criteria
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