LTIMindtree reported a 1.1% revenue growth to $1.23 billion for the second quarter, alongside an EBIT margin of 15.6%. While AI-driven revenue increased to 13.4% of the total, order inflows softened to $1.26 billion from $1.68 billion in the previous quarter. The company faces a critical phase as it balances investment in AI with the integration of its Randstad Technology Consulting Services acquisition.
LTIMindtree reported steady performance for the second quarter of fiscal 2027, with revenue reaching $1.235 billion. This marks a 1.1% increase in constant currency terms. Despite the competitive environment in the IT services sector, the company managed to expand its operating profit margin by 10 basis points, reaching 15.6%. This improvement occurred even as the company increased its spending on wage hikes and initiatives in artificial intelligence.
A key area for investors to track is the trend in new business. Order inflows for the quarter stood at $1.26 billion, a decline compared to the $1.68 billion reported in the first quarter of the fiscal year. While management has expressed optimism about a stronger second half for fiscal 2027 based on anticipated deal ramp-ups, the company must work to accelerate its growth trajectory to meet long-term expectations.
The company is actively shifting its focus toward artificial intelligence, which now contributes 13.4% to its total revenue, up from 12% in the previous quarter. These AI-focused services are important because they generally offer better profitability than traditional outsourcing work, which has been under significant pricing pressure across the industry. Anand Rathi, in a recent report, initiated a buy rating on the stock with a target price of Rs 5,125, suggesting a potential upside based on the company's long-term growth in AI services.
The path forward involves several execution challenges. The company is currently in the process of integrating the Randstad Technology Consulting Services acquisition, which introduces risks related to project timelines and cost management. Additionally, seasonal fluctuations in the technology and services segment caused a 4% sequential decline in that specific area, though this was balanced by better performance in the financial services and production sectors.
Looking ahead, analysts have adjusted their earnings per share estimates for fiscal 2027 to 2029 upward by up to 5.8%. The stock currently trades at 18.6x and 16.8x its estimated earnings for fiscal 2028 and 2029, respectively, excluding the impact of the recent acquisition. Investors may closely watch for deal execution progress, the integration status of the new acquisition, and margin stability in the coming quarters to see if the company can sustain its current momentum in a challenging sector environment.