LTTS cuts FY26 growth guidance; Q3 profit slips sequentially, margins improve

L&T Technology Services delivered a mixed operational performance in the December quarter (Q3FY16), with sequential pressure on revenue and net profit. However, margins improved on tighter cost controls aided by a sharper focus on profitability.

The engineering services firm reported a 7.9% quarter-on-quarter (QoQ) decline in consolidated net profit at ₹302.6 crore for Q3, compared with ₹328.7 crore in the preceding quarter. Profitability was further weighed down by an exceptional loss of ₹35.4 crore during the period.

Revenue from operations softened 1.9% sequentially to ₹2,923 crore, down from ₹2,979 crore in Q2, reflecting weaker client spending in select verticals and geographies.

In constant currency terms, revenue declined 2.8% QoQ, against Street expectations of around 1.5% growth. Dollar revenue fell 3.2% sequentially, underscoring near-term demand headwinds across discretionary engineering programmes.

	Q1FY25	Q2FY25	Q3FY25	Q4FY25	Q1FY26	Q2FY26	Q3FY26
CC QOQ	-3.10%	3.40%	3.10%	10.50%	-4.20%	1.30%	-2.80%
CC YOY	6.10%	6.30%	8.70%	14.20%	12.80%	10.40%	3.90%

Operationally, however, LTTS showed resilience. Earnings before interest and tax (EBIT) rose 7.2% QoQ to ₹427.2 crore from ₹398.4 crore in the September quarter. This translated into an EBIT margin of 14.6%, a sharp improvement of 120 basis points over Q2 and ahead of market estimates of about 13.7%. The margin expansion was driven by efficiency measures, portfolio rationalisation and a greater emphasis on higher-value work.

	Q1FY25	Q2FY25	Q3FY25	Q4FY25	Q1FY26	Q2FY26	Q3FY26
$ Rev	295	307	311.9	345.1	335.3	337	326.3
$  Rev QOQ	-3.3%	4.1%	1.6%	10.6%	-2.8%	0.5%	-3.2%
$ Rev yoy	5.4%	6.6%	7.3%	13.1%	13.7%	9.8%	4.6%
EBIT %	15.60%	15.10%	15.9%	13.2%	13.3%	13.4%	14.6%
PAT	313.6	319.6	322.4	311.1	316	329	302.6

During the quarter, the company recalibrated its growth outlook, trimming its earlier guidance. LTTS reduced its FY26 constant currency revenue growth expectation from double digits to mid-single-digit growth, signalling a conscious pivot towards profitability over scale. Management said the reassessment was part of groundwork for its ‘Lakshya’ five-year strategy, which will commence from April 1, 2026.

“In preparation for our Lakshya five-year strategy, we have re-evaluated market trends, client spending priorities and potential high-growth profit pools,” the company said, adding that it is pivoting towards delivering full-stack engineering intelligence solutions and reassessing regional focus areas that do not align with its long-term roadmap.

Vertical performance was mixed in dollar terms. Sustainability emerged as the fastest-growing segment, posting 2% QoQ growth, while mobility grew a modest 0.4%. The technology vertical, however, saw a sharp 10% sequential decline.

Geographically, North America remained relatively stable with 0.6% growth, but other regions faced pressure. Europe declined 1.5% QoQ, India de-grew sharply by 18.3% and the rest of the world fell 10.5%, reflecting uneven recovery in engineering spend across markets.