Over the last two years, LTIM has faced multiple challenges (macro and micro), leading to repeated disappointments. The company now appears to be turning the corner under the new CEO Mr Venu Lambu, who is targeting industry-leading growth as well as improved margins. We continue to like the story and maintain FY26E/27E EPS (<1% change). We now value LTIM at 30x FY27E PE (earlier 25x). Maintain ‘BUY’ with a TP of INR6,200 (earlier INR5,200). Broad-based sequential growth with margin expansion Revenue grew +0.8% QoQ/+4.4% YoY in CC terms, broad-based sequential growth. Consumer/ Healthcare/ BFSI/ Hi-tech/ Manufacturing grew 5.6%/ 3.8%/ 1.7%/ 1.1%/ 0.4% QoQ. By geography, North America/Europe grew 1.8%/10.2% QoQ while RoW declined -5.7% QoQ. Order inflow totalled USD1.63bn (+1.9% QoQ/+16.4% YoY), including LTIM’s largest-ever deal in Q1 with improvement in large deal traction. Execution on the deal has already started, and shall lead to a ramp-up in Q2FY26. EBIT margin expanded 50bp QoQ to 14.3%, primarily driven by ‘Fit for future’ initiatives (+100bp) partially offset by higher visa and travel costs. Margins are expected to expand further in coming quarters, aligned with growth. Strategic initiatives boosting growth and margins Mr Venu Lambu, CEO, highlighted progress on key strategic initiatives, which has contributed positively to growth and margins. In Q1, LTIM launched BlueVerse, Agentic AI ecosystem and extensively adopted AI across internal functions with 62 initiatives across seven product lines and nine business processes. Employee headcount stood at 83,889 (-418 QoQ) with hiring of ~1,600 freshers in Q1. Utilization improved to 88.1% in Q1FY26 (from 85.8% in Q4FY25) driven by operational efficiency. Management intends to bring it down to 86–87%, so as to be better positioned to capture demand during upcoming quarters. Growth at reasonable valuation; maintain ‘BUY’ LTIM is now in a unique position, wherein it is trading below the expensive high-growth tier-2 Indian IT companies, and above the relatively inexpensive low-growth tier-1 IT companies. It represents growth at reasonable valuation, with a favourable risk-reward profile. We continue to like the company, its strong delivery capabilities and clientele, and strong positioning in key verticals. Maintain ‘BUY’.
