LTTS Q2: revenue up 12.1%, AI deals over half of large wins

L&T Technology Services (LTTS), the engineering research and design services company of the Larsen & Toubro group, reported on October 19, 2026 that its revenue rose 12.1% from a year earlier to Rs 3,040.4 crore in the July to September quarter, the second quarter of the 2026-27 financial year. Net income was Rs 548.2 crore, up 66.8%, but that figure includes a one-time gain of Rs 165 crore from selling its SmartWorld & Communications (SWC) business. The company said artificial intelligence-related contracts made up more than half of the value of its large deals in the quarter.

LTTS does not write business software in the way large IT services firms do. It sells engineering work: designing parts of cars, aircraft, medical devices, telecom equipment and factory systems for global manufacturers, increasingly with software and AI built in. Its results are therefore a guide to how much big industrial companies around the world are spending on research, product design and digital factories, the core of what is often called Industry 4.0.

The headline profit jump needs care. Most of the extra profit came from selling a business, not from day-to-day operations. Stripping out the Rs 165 crore gain, profit from continuing operations rose about 20%, which is solid but far less dramatic than the 66.8% headline. Readers comparing company results should always check whether a big jump comes from one-off items.

The more telling numbers are the gap between rupee and dollar growth, and the AI share of new deals. Revenue grew 12.1% in rupees but only 3.3% in dollars, which shows that a weaker rupee boosted the rupee figures; in constant currency, the underlying business grew 4.8%. At the same time, more than half the value of large new contracts was linked to AI, which the company groups under what it calls Engineering Intelligence. That suggests clients are shifting engineering budgets towards AI-enabled products and processes, even as overall growth stays modest.

Chief Executive and Managing Director Amit Chadha linked the quarter's performance to the company's investments in this area and said the long-term aim is revenue growth of 13% to 15% a year with operating margins of 16% to 17% over the next five years. That is a company target, not a forecast by independent analysts.

Short-term: Shareholders on the register on October 27 will receive the Rs 20 interim dividend. Indian exchanges are closed on October 20 for Dussehra, so the market's first reaction to the results comes when trading resumes on October 21.

Long-term: If AI-led engineering work keeps growing as a share of new contracts, it could lift growth and margins for Indian engineering services firms, which compete for the research and design budgets of global manufacturers. Slow dollar growth, however, shows that demand is still uneven.

Who is affected: LTTS shareholders and employees, engineering graduates looking for design and R&D jobs, global manufacturers that outsource engineering work to India, and competitors in the engineering services sector.

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