LKP Research Initiates Buy Recommendation for LTM with Price Target of Rs 5,260

LTM Ltd Reports Decent Quarter with Revenue Growth

LTM Ltd (LTM) has reported a decent quarter with a revenue of USD 1.2 billion, marking a +1.2%/7% growth in constant currency (CC) terms on a quarterly (QoQ) and yearly (YoY) basis, respectively. This growth is supported by broad-based execution outside the banking, financial services, and insurance (BFSI) sector.

The company's earnings before interest and taxes (EBIT) margin moderated 100 basis points (bps) on a quarterly basis to 15.1%, impacted by phased wage hikes and productivity commitments in select accounts. However, this was partly cushioned by favourable currency movement. Adjusted profit after tax (PAT) came in at ₹13.4 billion, while reported PAT of ₹13.8 billion included a reversal of part one-off labour code related cost.

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Vertical performance remained mixed but encouraging beneath the headline margin softness. The BFSI segment declined 4.9% on a quarterly basis due to a deliberate productivity reset in a large client engagement. However, management indicated that the segment is nearing trough levels, with recovery expected from Q1 FY27 onward.

Outlook and Valuation

We remain cautious as the growth acceleration needed from current levels is steep and depends on successful AI monetization and M&A execution. While the strategy is promising, execution visibility is still limited. As a result, we have cut our valuation multiple from 30x to 23x FY28E EPS, arriving at a target price (TP) of ₹5,260. We maintain our BUY rating.