LTM Q2: margin passes at 15.6%, growth bar not met; hold

LTM [][***** reported Q2 FY27 on 16 October. Revenue was Rs 11,807.6 crore, up 13.6 percent year on year, and up 5.1 percent in constant currency. In dollar terms, revenue rose 1.1 percent on the quarter to $1,235.2 million. Net profit was Rs 1,379.9 crore, flat year on year and down 6 percent on the quarter. AI revenue grew 40 percent and is 13.4 percent of sales. Order inflow was $1.26 billion, down from $1.59 billion a year earlier. My 9 October post set the accumulation test at constant-currency quarter-on-quarter growth of 1.5 percent or more, with an EBIT margin of 15.5 percent or more. The margin passed at 15.6 percent. The growth test did not: the sources do not state constant-currency growth on the quarter, and dollar revenue rose 1.1 percent, below the bar. Management said it expects the second half of FY27 to outperform the first, and that EBIT margin will hold at about FY26 levels. LTM closed at Rs 4,198.39 on StockGro’s 3:59 PM IST print on 30 October, up 3.2 percent from Rs 4,067.79. That is 19 percent above my Rs 3,528.00 exit. My view: hold, not a fresh entry. The margin passed, but the growth test was not met on the figures available, so fresh money stays out. The price has also moved well above the levels I set in October. My exit is a close below Rs 3,528.00, the 30 June NSE low, unchanged. Nothing in the result triggers it. Disclosure: Vijay Kumar Gupta, SEBI Registered Research Analyst, INH000020226, Vijay Gupta Advisory. SEBI registration and NISM certification do not guarantee performance or assure returns. Securities markets are subject to market risks. No holdings in the subject company.