LTM margin slips sequentially as costs outpace revenue growth
Year-on-year profit growth benefited from slower expense growth, but other income still accounted for 12.59% of pre-tax profit.
Filed 23 Apr 2026, 16:51 IST · after market close · LTM Ltd (LTM)
Key takeaways
- Consolidated operating margin improved 1.14 percentage points year on year to 17.47%, but narrowed 1.11 percentage points sequentially as expenses grew +6.16% against revenue growth of +4.74%.
- Consolidated net profit grew +22.92% year on year, although other income contributed 12.59% of pre-tax profit.
- The stock fell 5.50% in the first session after the results, versus a 1.95% median absolute move across its previous eight results.
Price around the results
Revenue growth held up, but sequential profit momentum weakened
Consolidated revenue grew +15.56% year on year and +4.74% sequentially. Operating profit rose +23.61% year on year, helped by expenses growing more slowly than revenue, but declined -1.48% sequentially as the cost base expanded faster. The sequential 44.17% rise in pre-tax profit was largely influenced by other income moving from Rs -363.1 cr in Q3FY26 to Rs 236.9 cr in Q4FY26.
Q4 margin fell below the IT peer median
Sequentially, expenses grew +6.16% against revenue growth of +4.74%, narrowing operating margin by 1.11 percentage points; lower interest costs and a 0.20-point reduction in the tax rate provided limited relief. Other income represented 12.59% of pre-tax profit, so the quarter's earnings quality was not entirely operating-led. Among 19 IT companies that have reported, LTM's 17.47% operating margin was 2.22 percentage points below the 19.69% median and ranked fifth from the bottom.
Margin direction reversed after two quarters near 18.6%
Operating margin rose from 16.33% in Q4FY25 to 18.57% in Q2FY26 and 18.58% in Q3FY26 before falling to 17.47% in Q4FY26. This makes the latest decline a break from the prior two-quarter plateau rather than a third consecutive fall. The year-on-year margin improvement was still 1.14 percentage points because revenue growth outpaced expense growth over that comparison.
Management points to order intake and an AI-led shift
Management said FY26 order booking was $6.6 billion, up 10.3%, and said its order intake and pipeline support its view of sustainable growth. The company said it accelerated its move toward an AI-centric organisation through the BlueVerse platform and talent transformation, while its Fit4Future programme delivered efficiency gains. It added 13 clients in Q4FY26, taking active clients to 751.
The post-result fall was unusually large for LTM
The stock fell 5.50% in the first session after the results and was down 7.26% after five sessions. That response was materially weaker than LTM's 1.95% median absolute move after its previous eight results, during which the stock fell after seven occasions and rose after one.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹11,292 cr | ₹10,781 cr | +4.74% | +15.56% |
| Other income | ₹237 cr | ₹-363 cr | — | -5.69% |
| Expenses | ₹9,319 cr | ₹8,778 cr | +6.16% | +13.98% |
| Operating profit | ₹1,973 cr | ₹2,003 cr | -1.48% | +23.61% |
| Operating margin (%) | 17.47% | 18.58% | — | — |
| Interest | ₹65 cr | ₹69 cr | -5.77% | -2.97% |
| Depreciation | ₹264 cr | ₹266 cr | -0.75% | +5.10% |
| Profit before tax | ₹1,881 cr | ₹1,305 cr | +44.17% | +23.00% |
| Tax | ₹494 cr | ₹345 cr | +43.06% | +23.21% |
| Net profit | ₹1,387 cr | ₹960 cr | +44.57% | +22.92% |
| EPS (₹) | ₹46.97 | ₹32.75 | +43.42% | +23.28% |
Operating margin of 17.47% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -5.50% | -4.36% |
| Next session | -4.09% | — |
| 5 sessions | -7.26% | -7.03% |
| 15 sessions | -10.08% | — |
| 30 sessions | -11.73% | — |
Volume on the results session was 2.33× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- LTM added 13 new clients in Q4 FY26 and had 751 active clients.
Guidance & outlook
- LTM says strong order intake, a healthy pipeline and a clear strategic direction position it for sustainable growth.
- LTM reported FY26 order booking of $6.6 billion, up 10.3%.
New orders
- LTM's FY26 order booking was $6.6 billion, up 10.3%.
- The Central Board of Direct Taxes selected LTM to modernize India's national direct tax analytics platform.
- A global financial institution selected LTM for an enterprise-wide AI-led business-process transformation engagement.
New initiatives
- LTM accelerated its strategic shift to an AI-centric organization using the BlueVerse platform and talent transformation.
- LTM unlocked new efficiency levels through its Fit4Future program.
Competition
- LTM describes itself as India's fifth-largest IT services company by market capitalization.
What to watch
- Whether operating margin recovers from 17.47% after the 1.11-percentage-point sequential decline.
- Whether active clients increase from 751 after 13 additions in Q4FY26.
- How subsequent order disclosures compare with FY26 booking of $6.6 billion, up 10.3%.