LTIMindtree Q3 FY26 Results: Sector Implications and Investment Outlook

Based on my comprehensive analysis of LTIMindtree’s Q3 FY26 results and broader sector data, here is a detailed report on the implications for the Indian IT services sector:

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LTIMindtree’s Q3 FY26 results, announced on January 19, 2026, demonstrate strong operational performance with

and , marking the company’s third consecutive quarter of 2%+ sequential growth [1][2]. These results carry significant implications for the broader Indian IT services sector’s valuations and investment outlook.

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Metric	Q3 FY26	Q-o-Q Change	Y-o-Y Change
USD Revenue	$1,208 Mn	+2.4%	+6.1%
Constant Currency Growth	-	+2.4%	+5.2%
EBIT Margin	16.1%	+20 bps	+230 bps
Reported PAT	₹971 Cr	-29.7%	-11%
Adjusted PAT	₹1,401 Cr	+1.5%	+29%

The reported PAT decline of 11% YoY was primarily due to a from India’s new labour code implementation, which increased liabilities for employee gratuity and leave encashment [2][3]. Excluding this impact, adjusted PAT grew 29% YoY.

• Active Clients:
  746 (net addition trajectory positive)
• $5M+ Clients:
  162 (up 10 YoY)
• $10M+ Clients:
  97 (up 7 YoY)
• $20M+ Clients:
  47 (up 8 YoY)
• Attrition:
  13.8% (improving from 14.2% in Q2) [1][3]

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Metric	Current	5-Year Average	Premium/Discount
Nifty IT Forward P/E	22.0x	24.9x	-11.6% vs avg
Nifty 50 Forward P/E	20.5x	~20.7x	At historical avg
IT Sector Weight in Nifty	~10%	15-18% (Historical)	Decadal Low

The Nifty IT index is currently trading at

, which represents an [4][5]. This valuation compression has been driven by:

1. Extended period of revenue growth slowdown
   (post-pandemic normalization)
2. Margin pressures
   from client optimization and pricing pressures
3. Macro uncertainty
   regarding H-1B visa policies and US trade relations

The current valuations appear increasingly justified by several tailwinds:

1. Margin Expansion Trajectory:
   LTIMindtree’s margin expansion to 16.1% (up 230 bps YoY) demonstrates operational improvement across the sector [1]

2. Sector Underweight Position:
   At ~10% weight in Nifty 50 (vs. ~15% historical average), the sector is at a
   decadal low weighting
   , suggesting room for reallocation [5]

3. Improving Growth Visibility:
   Q3 FY26 marked the
   third consecutive quarter of 2%+ sequential growth
   for LTIMindtree, indicating a bottoming out of the growth cycle [2]

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Catalyst	Impact Level	Status
AI Monetization	High (9/10)	Moving from pilots to payoffs
H-1B Visa Policy Relief	High (8/10)	Trump administration expanded exemptions
India-US Trade Deal	Moderate-High (7/10)	Ongoing negotiations
Currency Depreciation	Moderate (6/10)	INR weakness provides tailwind
Valuation Compression Complete	Moderate (7/10)	Largely played out

The Q3 FY26 results from LTIMindtree and peers reveal several positive trends:

1. Deal Pipeline Strength:
   Order bookings showed
   median YoY growth of ~26%
   , indicating robust demand pipelines [4]

2. Enterprise AI Moving to Production:
   • Infosys reported productivity gains of
     40-50%
     in select workflows through AI services
   • HCL Tech’s advanced AI revenue crossed
     $100 million
     (nearly 3% of revenue) [4]

3. Geographic Diversification:
   While North America remains dominant, Europe and Japan show improving demand, with Japan viewed as a long-term growth opportunity given low outsourcing penetration [4]

1. Regulatory Compliance Costs:
   New labour codes have created
   one-time charges
   across the sector (Infosys: ₹1,289 crore, LTIMindtree: ₹590 crore) [2][3]

2. Client Optimization:
   Large enterprise clients continue to
   “do more with fewer people”
   , creating top-line headwinds [4]

3. Valuation Sensitivity:
   India remains among the most expensive equity markets globally, trading above
   20x forward P/E
   vs. ~15x average across major economies [6]

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Company	Revenue Growth (YoY CC %)	EBIT Margin (%)	CY25 Stock Performance
Persistent Systems	8.5%	15.2%	+85%
LTIMindtree	5.2%	16.1%	+45%
HCL Tech	2.4%	19.2%	+35%
Infosys	2.3%	21.0%	+28%
TCS	2.1%	25.2%	+12%
Mphasis	2.1%	14.5%	+55%
Wipro	0.3%	16.5%	+8%
Tech Mahindra	1.2%	13.8%	+15%

LTIMindtree’s

positions it as one of the , second only to Persistent Systems among the peers analyzed [1].

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• Bernstein:
  Moved to “modest overweight” on IT from underweight, citing “modest expectations” and potential for AI-driven deal acceleration [6]
• ICICI Direct:
  Positive on IT sector, citing “macro tailwinds consolidating” and “valuation springboard moment” [5]
• Kotak Securities:
  Views enterprise AI adoption as a
  7-8 year journey
  , suggesting sustained demand tailwind [4]

• AI transformation spending accelerates, driving revenue acceleration beyond current modest growth levels
• India-US trade deal provides positive sentiment catalyst
• H-1B visa stability reduces policy uncertainty
• Margin expansion continues as operational efficiencies compound

• Client budget optimization continues, limiting top-line growth
• Pricing pressure from competitive dynamics
• Global macro uncertainty (recession risk) impacts discretionary spending
• Valuation premium limits upside if earnings don’t accelerate

1. LTIMindtree’s strong Q3 FY26 results validate the narrative of improving growth dynamics
   in the Indian IT sector, with the company demonstrating consistent sequential growth momentum

2. Margins are expanding
   across the sector as companies optimize costs and benefit from operational efficiencies

3. Valuations appear reasonable
   at 22x forward P/E (11.6% discount to 5-year average), with the sector at decadal low weightings

4. AI monetization is accelerating
   from experimentation to production deployments, providing a structural growth driver

5. Near-term catalysts
   (H-1B relief, India-US trade deal potential) provide additional upside optionality

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LTIMindtree’s Q3 FY26 results—featuring 6.1% YoY revenue growth and 230 bps margin expansion—signal a

for the Indian IT services sector. The combination of improving growth visibility, sustained margin expansion, and reasonable valuations (22x forward P/E) creates a for the sector.

While double-digit growth reminiscent of the pandemic era is unlikely to return, the sector appears well-positioned for

driven by AI transformation, geographic diversification, and a more constructive macro environment. Investors with a may find current levels attractive for building positions in quality Indian IT names.

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[1] LTIMindtree Q3 FY26 Stock Exchange Intimation (NSE India), January 19, 2026 - https://nsearchives.nseindia.com/corporate/LTI_19012026163000_Stockexchangeintimationsigned2.pdf

[2] Economic Times - “LTIMindtree Q3 results: PAT falls 11% YoY to Rs 971 crore” - https://m.economictimes.com/markets/stocks/earnings/ltimindtree-q3-results-pat-falls-11-yoy-to-rs-971-crore-impacted-by-new-labour-code-revenue-up-12/articleshow/126678470.cms

[3] Moneycontrol - “LTIMindtree Q3 results: Net profit falls 12% to Rs 960 crore” - https://www.moneycontrol.com/news/business/earnings/ltimindtree-q3-results-net-profit-falls-12-to-rs-960-crore-due-to-labour-code-charges-13779523.html

[4] Times of India - “IT reset: Indian tech stocks search for momentum after a long slowdown” - https://timesofindia.indiatimes.com/business/india-business/it-reset-indian-tech-stocks-search-for-momentum-after-a-long-slowdown-ai-shifts-from-pilots-to-payoffs/articleshow/126145239.cms

[5] ICICI Direct - “Market Strategy 2026” - https://www.icicidirect.com/mailcontent/idirect_marketstrategy_2026.pdf

[6] Times of India - “Bernstein cuts India 2026 equity outlook to Neutral” - https://timesofindia.indiatimes.com/business/india-business/2026-brings-no-new-tailwinds-bernstein-cuts-india-2026-equity-outlook-to-neutral/articleshow/126447467.cms

[7] Multibagg - “Infosys Outlook Lifts IT Sector; Nifty IT Index Jumps 3%” - https://www.multibagg.ai/market-pulse/articles/infosys-outlook-lifts-it-sector-cmkh0be0252aont0jwlyjlxek

[8] BW Disrupt - “India’s 2026 Growth Outlook: Key Sectors” - https://www.bwdisrupt.com/article/india-s-2026-growth-outlook-key-sectors-driving-technology-led-and-policy-backed-growth-585383