LTM has reported AI-related revenue for the first time, disclosing a quarterly run rate of $150 million, or 12.2% of its quarterly revenue, giving it a higher AI revenue share than larger peers TCS and HCLTech.
The disclosure marks one of the first instances of an Indian IT company quantifying AI revenue as a proportion of overall sales. While TCS generates significantly higher AI revenue in absolute terms, AI contributes a smaller share of its business at about 8.5% of annualised revenue. HCLTech's advanced AI business contributed $155 million, or 4.2% of quarterly revenue.
The comparison highlights the growing contribution of AI-led work to LTM's business mix rather than the size of its AI business. The company reported the AI metric alongside its June-quarter earnings as management outlined its strategy to expand AI-led services across clients.
AI Business Gains Prominence
Chief Executive Officer and Managing Director Venu Lambu said AI-related revenue across the company's Creative AI, Industrial AI and Business AI businesses reached a quarterly run rate of about $150 million.
"Our AI revenue across Creative AI, Industrial AI and Business AI together contributed approximately $150 million on a quarterly run-rate basis," Lambu said during the post-earnings conference call.
He said the company has reorganised its operations around AI through three lines of business - iRun, iTransform and Business AI - supported by its BlueVerse AI ecosystem.
Lambu added that the company aims to increase the share of AI-led work while embedding AI across enterprise technology, business processes and industrial applications.
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Growth Expected To Improve
LTM reported constant-currency revenue growth of 0.3% quarter-on-quarter in the June quarter, its slowest sequential growth in four quarters. EBIT margin expanded 40 basis points sequentially to 15.5%, while deal bookings stood at $1.68 billion, broadly in line with expectations.
Technology and Financial Services led growth during the quarter, while the Production segment declined 5.7% sequentially in constant currency. Consumer revenue fell 0.7% because of delayed project ramp-ups and shipment disruptions, while revenue from travel and the Middle East was affected by the Gulf conflict.
Headcount declined by a net 64 employees, while attrition remained unchanged at 13.3%.
Management said it expects business momentum to improve through FY27.
"Our growth will accelerate through Q2 and into the second half alongside further expansion on the margins," Lambu said, citing a stable order book, AI-led deal momentum and the completion of productivity-linked pricing discussions with key clients.
Brokerages Maintain Cautious Stance
Morgan Stanley maintained its Equal-weight rating on LTM with a target price of Rs 4,000, saying revenue met expectations while margins were stronger than forecast. The brokerage said management reiterated that FY27 revenue growth would exceed FY26 and expects the CBDT project to gather pace in the second quarter.
Citi retained its Sell rating and trimmed its target price to Rs 3,450 from Rs 3,455. It said June-quarter performance was broadly in line with estimates and expects LTM to deliver around 5% organic revenue CAGR between FY26 and FY28, while noting management's confidence that growth would improve in the second quarter and continue into the second half.
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