LTTS Profit Increased by 17.4% in Q1 Driven by Mobility and Sustainability Segments

LTM, formerly known as LTI Mindtree, has released its report on the first quarter of the financial year 2027. During this period, the company's net profit increased by 17%, reaching ₹1,468 crore, while revenue grew by 18% to ₹11,608 crore.

Financial Performance and Strategy

In dollar terms, the company's revenue for the period ending June 30 was $1.22 billion, demonstrating a 6.1% growth. Furthermore, growth in constant currency reached 6.4%. In a statement, the company emphasized that the first quarter results reflect progress in implementing its artificial intelligence (AI) focused strategy.

Venu Lambo, CEO and Managing Director, noted that the company's transition to an AI focus is yielding tangible results for clients, which is evident in the quality and scale of contracts being secured. Thanks to a strong order book and a healthy pipeline across various industry segments, management expressed confidence in continued growth momentum throughout the year.

Vertical Dynamics and AI Revenue

Almost all verticals, except for financial services, showed positive momentum. The consumer, technology, and manufacturing verticals grew by 18.2%, 10%, and 5.3%, respectively. Financial services, conversely, recorded a negative growth of 2.5% in constant currency. Lambo added that the company's revenue from AI in the creative, business, and industrial sectors amounted to approximately $150 million based on the quarterly run rate.

Operational Changes

The EBITDA margin also improved by 120 basis points, reaching 15.5%. The employee attrition rate remained unchanged at 13.3%, and the total number of employees slightly decreased by 64 people to 87,886. It was noted that IT companies had slowed down hiring for some time due to the unstable macroeconomic environment; however, TCS began the new fiscal year with a positive outlook on recruitment.

Shares of Tata Consultancy Services (TCS), India's largest IT company, increased by 4% during Friday's trading after the company announced its results for the first quarter of fiscal year 2027. At the market open, the stock showed a rise of 2.7%, reaching ₹2,105.20, before hitting a high of ₹2,133.30 on the National Stock Exchange (NSE).

First Quarter Financial Performance

TCS reported a year-on-year increase in net profit of 4.61%, reaching ₹13,349 crore for the June quarter. In the same period last year, the company's profit was ₹12,760 crore. In terms of revenue, the first quarter figures grew by 13.9% year-on-year, amounting to ₹72,275 crore, slightly exceeding the March figure of ₹70,698 crore.

The Tata group company, which does not provide future revenue forecasts, stated that its annual Artificial Intelligence (AI) revenue in the first quarter of fiscal year 2027 was $2.6 billion, an increase of 13.6% compared to the previous quarter. TCS reported an operating margin of 24% and a net margin of 19.2%. The total contract value (TCV) for the first quarter was $9.5 billion, as indicated in the company's documentation.

Dividends and Analyst Forecasts

Along with the results, TCS announced an interim dividend payment of ₹12 per share valued at ₹1. The record date for receiving dividends is set for July 15, with payment scheduled for July 31.

Analysts from various brokerage houses provided their ratings. Nomura maintained a 'Buy' rating on TCS following the first-quarter results, noting that the deal volume provides reasonable growth visibility. The broker set a target price of ₹2,590 (previously ₹2,570), implying a potential growth of 26% from the previous closing price of ₹2,050. Nomura forecasts improved demand in the second quarter, especially in the manufacturing and life sciences sectors, and is optimistic about BFSI and technology services.

360 ONE Capital maintained a 'Hold' recommendation on TCS with an unchanged target price of ₹2,290, noting that the first-quarter results met their modest expectations. This broker pointed out that TCS's revenue growth was a slight quarterly increase of 0.4% in CC, while the EBIT gross profit decreased by 130 basis points quarterly due to wage increases.

Centrum Broking reiterated its 'Buy' recommendation on TCS, citing stable business execution and strong deal wins in June, supported by large AI transformation projects and strategic partnerships. Centrum analysts noted that a robust order book provides visibility for gradual revenue recovery as deal execution accelerates.

Anand Rathi also maintained a 'Buy' rating on TCS, indicating that sustained deal volume and improved revenue conversion could be the next catalyst. The broker set a target price of ₹2,408, suggesting a potential growth of 17.5% from the previous closing price of ₹2,050.

Motilal Oswal Financial Services confirmed its 'Buy' rating on TCS with a target price of ₹2,350, implying a potential growth of 15%. This broker noted that the CC revenue growth was higher than their stagnation forecast, and the adjusted net profit also exceeded expectations.