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L&T Technology Services reports a 7.9% QoQ decline in Q3 net profit and 1.9% sequential revenue fall, even as EBIT margin expands to 14.6%. Company lowers FY26 constant currency growth guidance to mid-single digits amid strategic pivot towards profitability.
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.
(Edited by : Shoma Bhattacharjee)
