L&T Technology Services Ltd (NSE: LTTS) Q4 2026 Earnings Call dated Apr. 22, 2026
Corporate Participants:
Sandesh Naik — Head of Investor Relations
Amit Chadha — Chief Executive Officer and Managing Director
Rajeev Gupta — Executive Director & Chief Financial Officer
Alind Saxena — President and Executive Director at L&T Technology Services
Analysts:
Vibhor Singhal — Analyst
Sandeep Shah — Analyst
Nitin Padmanabhan — Analyst
Dipesh Mehta — Analyst
Shradha Agarwal — Analyst
Bhavik Mehta — Analyst
Rahul Jain — Analyst
Karan Uppal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q4 FY26 Conference Call of L&T Technology Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Sandesh Naik, Head of Investor Relations. Thank you, and over to you, Mr. Sandesh.
Sandesh Naik — Head of Investor Relations
Thank you, Sagar. Hello, everyone. I’m Sandesh, and welcome to the earnings call of L&T Technology Services for the fourth quarter of FY26. Our financial results, investor release and press release have been filed on the stock exchanges and are also available on our website, www.ltts.com. I hope you have had a chance to go through them. This call is for 60 minutes. We will try to wrap up the management remarks in 20 minutes and then open up for Q&A.
The audio recording of this call will be available on our website about an hour after the call ends. With that, let me introduce the leadership team present on this call. We have with us Amit Chadha, CEO and MD; Alind Saxena, Executive Director; and President, Rajeev Gupta, CFO; and Munjay Singh COO. We will begin with Amit providing an overview of the company’s performance and outlook, followed by Rajeev, who will walk you through the financial performance.
I now invite Amit for his opening remarks.
Amit Chadha — Chief Executive Officer and Managing Director
Perfect. Audible, clear?
Sandesh Naik — Head of Investor Relations
Loud and clear.
Amit Chadha — Chief Executive Officer and Managing Director
Perfect. So thank you all for joining us on the call today on a very busy results day. First of all, I would like to congratulate and welcome our CFO, Rajeev Gupta; as Executive Director and Chief Financial Officer, and the Board of LTTS. I would also like to extend a warm welcome to Mr. Amitabh Kant on his appointment as an independent director on the Board of LTTS. We are delighted to have him join the board. Our governance reformer and public policy change agent can also serves on the Board of Directors of the L&T Group.
Now, let me share the key highlights for FY26. In FY26, the total revenue, including continued and discontinued operations, grew 5% and to $1.321 billion, as indicated in the previous quarter. The SWC business has been classified has continued — discontinued going forward. And therefore, the revenue from continued operations delivered a higher growth of 8.3% in and 1 million to 3 million. Here on, we will only talk about the continued operations. Sustainability continues to do well with 12.8% growth, while tech, including IntelliSwift, grew 19.7%. North America did well with a growth of 12%. All other geos showed positive growth. Our FY26 large deal wins came up at $855 million, up 40% over the previous year.
Now, let me provide you key highlights for quarter four FY26. Revenue was $306 million, grew 0.3% annually, while we grew 1.7% sequentially, reflecting a deliberate shift towards improving the quality of revenue over the last two quarters, with strategic portfolio rationalization leading to a more resilient business baseline. This is as we had informed you during the Q3 results call. This is reflected in our EBIT margins expanding by 40 bps sequentially to 15.2% second quarter in a row. Rajeev will share more details in his commentary.
Sustainability grew sequentially, continuing with its double-digit year-on-year growth momentum, and mobility remains steady. Our large deal win continued its momentum with a healthy of $182 million in the quarter, reflecting our deep client relationships and validation of our new technology investments. We finalized our Lakshya 31 plan and completed the strategic portfolio realignment exercise, resulting in pruning businesses based on regional focus and offerings and divestment of the SWC business to pivot on engineering intelligence and core AI-led digital engineering services.
Let me now provide you our segment performance and outlook. Mobility. The mobility segment remained steady with revenues almost flat on a sequential basis. Over 40% of our large deal wins in Q4 were in the mobility segment, indicating a turnaround in CY and C26. We see momentum in auto subsegment, particularly North America automotive, showing good growth over the previous quarter. Aero and rail subsegment has been resilient, while trucks and off-highway has been slightly subdued.
We are gaining traction significantly in optimizing products and software life cycle through generative AI and Agentic AI-led delivery models, enhancing enablement of product experience for end customers. Our global premier technology group selected LTTS as a strategic engineering partner to drive digital transformation across its entities and established a high-value engineering hub with us. Second, LTTS has entered into a strategic collaboration to establish a center of excellence for next-generation recreational marine solutions, leveraging its cross-domain expertise in software-defined vehicles, electrification, AI and digital engineering.
Finally, LTTS has selected as a strategic partner for cargo logistics major to develop next-gen air mobility solutions, leveraging LTTS capabilities across aerospace, engineering, electrification, manufacturing to accelerate aircraft readiness. From a geo standpoint, the US market, particularly automotive is seeing positive traction with increased investments in SDV technology, and we have been gaining market share.
In Japan, steady wins in programs for future model launches has led to our growth in our geography. For European OEMs, cost optimization remains a priority through strategic partnerships. We are well-positioned to benefit from these as we go forward with a number of deals in the pipeline. In summary, Mobility segment is showing early signs of growth. We expect sustained momentum in FY26. Driven by a robust pipeline and stronger deal ramp-ups of the large deals.
Moving on to our second segment of sustainability. Sustainability grew 11% year-on-year on the back of strong execution of deals that we have won in the previous quarters. Over 50% of large deal wins in Q4 were in a segment, ensuring strong momentum growth. This segment established its strong credentials by forging a strategic partnership with a leading global energy major to be its engineering service and technology partner for digital expertise in India with 500-plus engineers. This was filed in the stock exchanges earlier last week. The industrial subsegment is benefiting from CapEx tailwinds in AI and data center spending globally.
Combined with our strong engineering capabilities in power electronics, embedded systems expertise, enabling cross-domain solutions combined with AI, which integrate digital automotive automation and AI-powered platforms across PDLC offerings. The energy automation and industrial machinery sector continued to see strong demand with reindustrialization of the US supported by a healthy pipeline in asset management and backed by large deal wins. Plant engineering, a subsegment of sustainability. Our demand continues to hold steady across EPG and O&D.
We were selected by a leading oil and gas operator for strategic initiative to build dental foundation across global assets, enabling engineering, operations and digital transformation. We were awarded a multiyear program by a North American energy major for data modernization and asset integrity support across onshore operations, leveraging advanced digital platforms across multiple geographies. We expect the growth momentum to continue for sustainability segment across both industrial and plant on the back of ramp-up in large deals and strong pipeline.
Moving on to tech. As mentioned earlier, we have recalibrated our business in this segment to focus on profitable growth. driven by forward-looking technologies. The subdued revenues in Tech segment reflect the conscious exit from nonstrategic businesses, where we have also incurred some one-time expenses on account of the same.
The media and tech subsegment is rapidly evolving with strong focus on AI-led platform-centric offerings, resulting in execution of more high-end and high-margin work for our clients. We do see growth in semiconductor and tech infra accounts, while media business has been steady. Deal wins we have on the previous quarters in the telecom and sub segment have been steadily ramping up.
The medtech segment subsegment, the deal momentum is evolved through ramp-ups in certain new accounts, strategic programs, and deeper relationships. We have secured multiple design and development mandates in human biologics and drug delivery devices from two leading global pharmaceutical companies.
We also partnered with top 10 new-based medical device manufacturer to bring camera-based AI intelligence to the operating group. This subsegment grew in line with company revenue annually. The software and platform subsegment, which includes IntelliSwift is leading our engineering intelligence framework for data-driven intelligence and automation, a large enhancement received from a leading hyperscale is expected to start ramping up Q1 onwards.
Let me now cover our technology quotient. EI or Engineering Intelligence is LTTS’ approach to embedding AI across products processes, next-gen manufacturing, translating deep engineering expertise into reliable real-world outcomes. Powered by multimodal identic and edge AI delivers autonomous production made systems driving differentiated high-value outcome reflected in our large deal wins.
LTTS has also strengthened its partnership with MIT Media Labs to explore and incubate forward-looking technologies such as multisensory intelligence, signal kinetics and personal robotics. We have surpassed the 1,700 mark in our patent filings for FY26. Congratulations to all our employees and technologies, including 673 patents filed by LTTS and 1,033 third with clients. Of these, patients now are in AI and GenAI alone.
Finally, let me share a glimpse of our Lakshya31 plan and the way forward. After careful consideration and deep analysis all the futuristic technologies and evolving market needs. LTTS has defined its core for the next five years. The company is doubling down across technology, manufacturing and industrial domains. Under its five-year strategic Lakshya plan, LTTS is sharpening its focus with six large technology bets, including EI, which will accelerate growth further in the three segments of mobility, sustainability and tech while consolidating our position as a global engineering intelligence partner for our clients, our six bets are software-defined mobility, plant build-out and modernization.
Energy and Industrial Automation to digital manufacturing, Nexgen compute and AI infra, software platforms in EI and medtech. These are the six bets that we have bet. To ensure strong execution of Lakshya31 strategy, we have reorganized and promoted our leadership from within to sharper accountability, deepen segment focus and accelerate market share gains through a differentiated growth approach.
To this end, I already shared with you the elevation of Rajeev on the Board. Additionally, Alind Saxena, who is currently Executive Director and President for Mobility and tech, will take responsibility for strategic initiatives, large deals and growth markets. In his role, he will drive scale to deals, bringing in additional revenues and growth to the company, as well as drive partnerships and complex deal wins. Sugar Tripathi, who has been in the company for more than 15 years and has led our plant engineering portfolio segment head will now lead the entire sustainability segment, IT plus and is being promoted to Chief Growth Officer sustainability, strengthening our play in energy, physical AI, automation, plant and manufacturing modernization.
Finally, Srinath Nagarur, who’s been in the company again for six-plus years, is being promoted to Chief Growth Officer for Mobility and Medtech, driving growth across software-defined technologies in mobility, as well as advancing remote diagnostics, robotics and agent-led solutions in the medtech space. SRI in his past has worked on mobility, medical and tech all the three spaces and bring that risk experience. All these leaders have been part of the LTTS executive management team for between 6 years to 15 years and bring the right blend of energy, experience humbleness and strong client relationships to accelerate our growth agenda.
Now moving on to outlook. The last five years, saw LTPS grew at 12.4% CAGR, outpacing industry growth of 8% as per Reno estimates. We believe we continue to be in a position to grow faster than the industry over the medium term, supported by strong core capabilities and execution discipline on revenue and margins. We remain cautiously optimistic in the near term and as part of our five-year Lakshya31 plan, we aspire to deliver 13% to 15% CAGR over the next five years with EBIT margins in the range of 16% to 17%.
With that said, I would like to truly thank all of you for the support that you provided me over these last five years. I look forward to the next five and would now hand over to Rajeev to take this — to provide his commentary, and then we’ll stay back for questions.
Rajeev Gupta — Executive Director & Chief Financial Officer
Thank you, Amit. Before getting into the commentary, I’d like to thank our Chairperson, the Board for reposing trust in me and having me on the Board and to Amit for its continued support. With that, let me begin by giving you an overall picture for the year FY26. FY26 total revenue included continuing and discontinued operations came in at $1.321 million, an year-on-year growth of 4.9%, EBIT margins for FY26 came to 14.1%. Net income margin for FY26 came in at 11.3%.
Now talking about this investment of SWC business. In March of 2026, we announced the disinvestment of SWC business. Accordingly, SWC business has now been classified as discontinued operations beginning quarter four FY26. With that context, my commentary herein after will address the continuing operations.
Starting with the key highlights for quarter four FY26, we had consistent deal momentum, resulting in average large real TC wins of $200 million across six consecutive quarters, our focus on improving the quality of revenue and operational efficiencies has further boosted the gross margins in Q4 FY26 with 150 basis points increase on a sequential basis. All three segments have shown sequential improvement in gross margins. Further, our collection efforts have led to improvement in DSO metrics during the quarter.
Moving to both quarter four FY26 and FY26 financials, starting with P&L. Our revenue for the quarter came in at INR2,858 crores, a growth of 2.5% on a sequential basis, while year-on-year grew at 8.3%. Revenue for FY26 was at INR10,996 crores, a growth of 14% over FY25. EBIT margin for the quarter came to 15.2%, an improvement of 40 bps over the previous quarter. EBIT margin for FY26 was at 14.5% of revenue. Effective tax rate for the quarter came in at 26.6%. For the year, effective tax rate was at 26.5%, showing an improvement of 90 bps over previous year. Going ahead, we expect this to be in the range of 26.5% to 27%.
Net income for the quarter stood at INR346 crores, which is 12.1% of revenue, showing an improvement of 70 bps over previous quarter. For FY26, net income was INR1,282 crores at 11% — 11.7% of revenue. EPS from continuing operations stood at INR30.14 for the quarter. translating to an annualized EPS of INR120.56. This represents an improvement over the reported FY25 EPS of INR119.7 million, underscoring the success of our portfolio rationalization strategy and the strengthened performance of our continuing business. Other income for the quarter was INR38 crores higher compared to previous quarter.
Now moving to the balance sheet, highlighting a few key line items. The combined DSO was at 83 days compared to 93 days in Q3, an improvement of 10 days. Bill DSO also improved from 68 days as compared to 77 days in quarter 3. The combined DSO is expected to be in the range of 85 to 90 days going forward. In FY26, free cash flow came in at INR1,280 crores. Our FY26 FCF as a percentage of net income stood at 100%. Our cash and investments improved to INR3,555 crores end of FY26 versus INR2,981 crores end of FY25.
On capital results, sorry, on capital return. The Board today recommended a final dividend of INR40 per share, taking the total dividend for FY26 to INR5 per share. This translates to a dividend payout ratio of 48% for FY26. Our return on equity stands at 20.4% for FY26. With respect to revenue metrics, in dollar terms, we reported revenue of $305.9 million, growth of 0.3% on a year-on-year basis, while a decline of 1.7% on a sequential basis. The sequential decline reflects a conscious exit from low-margin and nonstrategic portfolio in addition to the disinvestment of SWC business. FY26 revenue came in at in year-on-year growth of 8.3%.
Talking about segment margin performance for quarter four FY26 Mobility segment margins for quarter four came in at 16.1%, a sequential improvement of 130 bps over previous quarter. Healthy deal wins in mobility in the previous quarters and sign of improvement in the automotive sector should lead to revenue growth in FY27, leading to further improvement of margins in this segment. Sustainability segment margins for quarter four remained steady on a sequential basis at 28.7%.
Strong execution of the deal wins in recent quarters led to improvement in quality of revenue and will continue to add revenue growth and margins in FY27 for sustainability. Tech segment margin for the quarter came in at 12.6%, sequential improvement of 210 bps over previous quarter. This is due to continued improvement in intelligence margins and restructuring efforts in this segment to focus on sustainable and profitable growth.
On operational metrics, the offshore mix was 53.5%, slightly better compared to Q3. We do see improvement opportunities in this mix in the coming future quarters. The T&M revenue mix was at 66.1% in Q4, higher compared to quarter 3. Client profile. We have the first $50 million plus account in sustained segment and have formally reported in the IR report and also an increase in number of clients across 5 million, 1 million accounts compared to previous quarters.
With our deep relationships with clients and new edge offerings, we expect this profile to improve further. Client contribution to revenue improved as compared to Q3 across categories. Head count improved sequentially by 522 to 23,830 at year-end as we onboarded freshers during the quarter. Attrition remained range-bound at 14.7% levels. realized rupee for quarter four was around 93.43% to the dollar, a depreciation of 4.3% versus Q3.
As I conclude, let me provide visibility on margin trajectory going forward. We did refer in our Q3 commentary that margins will continue to improve and indeed have seen Q4 margins improved to 15.2%. We expect margins to continue to improve further based on capital allocation towards high-growth segments and newer technologies in line with our Lakshya31 strategy.
Also, we will see improved segment mix with now so sustainability segment contributing 36% of overall revenues in FY26. The recent deal wins will allow to continue this trend in FY27, leading to improvement in overall margins. Further operational efficiency parameters around AI-led delivery initiatives to improve operational levers, nonlinearity of revenue and rationalization of SG&A costs in line with continuing business are further opportunities to improve margins.
With this, we now advance our aspiration to achieve mid-16% EBIT margin levels on or before quarter four FY27. And as part of our five-year Lakshya31 plan, we aspire to deliver 13% to 15% CAGR over the next five years, with EBIT margins in the range of 16% to 17%.
I thank everyone for their support. And with that, I hand it over to the moderator for any questions.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions]. Ladies and gentlemen, we will wait for a moment while the question queue assembles again. [Operator Instructions]. Our first question comes from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.
Vibhor Singhal
Yeah, hi. Thanks for taking my question. I hope I’m audible.
Operator
Yes, sir, you are audible.
Vibhor Singhal
Yeah, yeah. Thank you so much, and congrats to Alind and Rajeev for their elevation. Amit, a couple of questions from my side. a very bold decision indeed in terms of divestment of the SWC business, something that we had acquired just three years ago. Just want to understand the thought process behind this step. I think we had earlier talked about this business offering us opportunities in the Middle East and some other places as well. So was the consideration here, just the profitability of the business that we were looking at? Or was it also that basically the growth opportunities that we saw in other segments were much better, and that is where we basically decided to allocate our capital to? Any basically color on what the thought process was behind this decision would be really helpful.
Amit Chadha
Sure. I’ll start, and then I’ll request Rajeev to add to it. So see, when we acquired Smart World, there were three components in Smart World. There was the smart cities part, which had — which was there. The second part was the telco infra piece. And the third was the cyber piece, right? So what we did was that our whole thesis was that we will take these three and we will immediately work on taking them international, right? That was our whole ploy that we had done.
Now, as we have moved forward, what has happened is the telco infra piece, we were able to take in international. We have been able to deliver two accounts that are upwards of $20 million in the company and then very profitable at that and growing, right, and gaining market share over competition with differentiated offerings. The cyber business, which was running actually at record margins. Again, we were able to take those capabilities and be able to infuse them within the company and take those forward.
Smart cities, however, we were not able to internationalize because a lot of that work is done by local governments and is done for creating local jobs. So after we have done it for three years with different kind of management as well as attention. What we have done is we therefore decided to divest. So the entire mostly India and slightly international operations of Smart World has been divested. And at the same time, we have retained some of the capabilities that we built organically being just associated. Those have continued on in the company and continue to provide leverage to us as we move forward. So that’s broadly where it is right now.
Would you like to add anything at this stage, Rajeev?
Rajeev Gupta
No, I think, Amit, has covered broadly. Vibhor, the only thing I would add to is that, look, when SWC business was acquired back in the start of 2023, the rationale was to take SWC Global, right? And much like Amit said, there were three areas of business. There was smart cities, smart city. There was infra and cyber. I think infra and cyber have shown positive results. Smart City for particularly India business, is where we could not see it taking global. And that led to making a strategic decision for the purpose of disinvestment. So largely, that’s where it is, Vibhor. Hopefully, it answers your question.
Vibhor Singhal
Yes, it definitely does. Thanks for that explanation. And since you are at it, Rajeev, may I just ask a couple of more questions. bookkeeping questions on the basically accounting of that. So we have basically the 1 million, 2 million revenues that we have mentioned, that basically takes into account the SWC revenue being not being considered for the entire FY26 and so does the P&L agreement, am I right?
Rajeev Gupta
That’s correct. So what you see on the investor report is reflecting the continued part of the business and does not have SWC in any of the prior quarters. So it has comparability and it’s like-for-like.
Vibhor Singhal
And we are not expecting any more divestment or any more basically modifications to the financials from Q1 onwards.
Rajeev Gupta
So from Q1 onwards, we will report the continued operations only.
Vibhor Singhal
Only. Got it, got it — and the reseatings complete? No, nothing is left in the resale part of that.
Rajeev Gupta
Yes, it is complete.
Vibhor Singhal
Got it. And just one last question, and then I’ll probably switch back to Amit for another question. Now that we have divested AWC business, and we know that basically the margins and the working capital days of the business were significantly inferior to our core business. Do we expect — I mean you mentioned the margin guidance we’re looking at a I mean, is that a kind of a target for the next five years? Or do you believe it can be achieved over the next two years to three years? And also, do we expect improvement in the DSO days immediately in the near term given that SWC business will be out of the above?
Rajeev Gupta
So on the margin part, Vibhor, I did clarify. So we continue to aspire to get to mid-16% levels by quarter four FY27 of this year. And if you’ve got an ability, we would like to deliver that prior to quarter four FY27. — that has remained. Correct. And the 7% is in line with the Luxe strategy. So over the period of five years, we would like to maintain EBIT margin in that band.
Third, on DSO metrics, you’re already seeing the improvement. I talked about the improvement in DSO metrics. And I highlighted it, what was the DSO metric, excluding the SWC business. So for quarter four, we came in at 83 days. So you’re already seeing the benefit of DSO days coming down. And we will be in the band of, say, between 85 to 90 days. What used to be including SWC, if I were to recall, quarter three, we were closer to between $110 million and $150 million.
Vibhor Singhal
Got it. Got it. Thanks for the detailed explanation. Amit, just one more question from my side. Your commentary alluded to some very positive signals on the auto segment. Now this is a very positive sign because this vertical has been under pressure for point of while for almost all of the players, you mentioned that the North American auto specifically is looking positive. So any color on basically how we are looking at are there any more — are there good frequencies that we’re looking at in North American auto? And also Will European auto is also expected to follow soon or will there be some time before that kind of recover?
Amit Chadha
Sure. So thanks, Vibhor, I just want to make one more point on your previous question on this is the continued business. So if you look at the quarter four results, the quarter four numbers that we published a continued business, that does have the business that we stopped doing also. So Q1 onwards, it’s all clean as you see it. moving forward. So it’s not just SWC, it’s also the other part that we divested, we are talking about $19 million annualized that we are taking out. That has been taken out in quarter four. So quarter one onwards, it is all of ours. And that’s why you see the revenues and margins in Q4, gross margin itself going up in the business, right?
Now counting on to automotive. Number one, on automotive, seeing U.S. automotive, what has happened is that our customers as well as overall as you’ve seen, they have taken a chunk of whatever hits they had on EV last year. And they are all sure footed moving ahead with hybrid and gas vehicles. This is a good thing because it provides a clear decision now that is pro clear of the path for design cycles to start yet again. And we are seeing some of that positive impact in NBV coming to us. That’s number one.
In Europe, they are still between moving market share in Asia, etc. But in Europe, there is a number of deals that we are fighting right now and competing for consolidation against European majors as well as other Indian companies. So there is a lot of that pipeline. So both have got slightly different shall I say, context and controls to it, but we are seeing positive momentum in automotive coming back.
Vibhor Singhal
Got it, Got it. Great. Thank you so much for taking my question. Congrats again on the very strong step, and wish you all the best. Thank you.
Amit Chadha
Thank you.
Operator
Your next question comes from the line of Sandeep Shah from Equirus Securities. Please go ahead.
Sandeep Shah
Yeah, thanks for the opportunity. Amit sir, just wanted to understand within mobility and sustainability, one can assume the worst is behind sustainability, we were anyway doing better, so mobility, you expect you can start growing Q-on-Q starting from the first quarter. And even in tech, when do you expect the worst to get over?
Amit Chadha
So thank you, Sandeep. So one, sustainability will continue to grow as we move forward, right? Mobility has stabilized this quarter, you will start seeing growth from next quarter. And in tech, there are three components. There’s medtech and there’s MMT-mediatech include Semcon and then there is software. And we do believe that next quarter onwards, we should start seeing net growth here. So we should see growth on all three as we move forward. The quantum of that of first will depend on as the quarter closes. As you know, we are still in the quarter now new quarter. so we’ll come back at the end of the quarter.
Sandeep Shah
Yeah, yeah. And just in terms of Lakshya outlook, is it fair to assume whatever we are targeting, which is 12% to 15% growth CAGR is largely organic? Or it also incorporate some inorganic?
Amit Chadha
So what we have stated right now is — will largely be — it’s 13% to 15%, not 12% to 15%, then again, there will be a new comment question will come, is it 12% or 13%. So I’m being very clear, 13 and largely organic with some tuck-in acquisitions as opportunities arise.
Sandeep Shah
Okay. Okay, thanks. And all the best.
Operator
Thank you. Your next question comes from the line of Nitin Padmanabhan from Investec. Please go ahead.
Nitin Padmanabhan
Yeah. Hi, good evening, thanks for the opportunity. So for question, first question is that from a 13% to 15% growth CAGR you mentioned that historically, it’s grown at 12.5%. So these numbers, the 12.5% is excluding the SWC bid, how should we understand that? And Second, this 13% to 15% CAGR is where basically the the dollar CC. Is that how you’re thinking about it?
Amit Chadha
I’m going to actually look at Rajeev to clarify on the dollar CC part and Rajeev, you want to take these?
Rajeev Gupta
So Nitin, to your first question, on 12.4%, this is actually excluding. And second, in terms of the constant currency, it will be — of course, we will be it more constant currency. But yes, over a five-year period, there may be some areas where we’ll talk even on reported currency as well.
Nitin Padmanabhan
So this 13% to 15% is rupee or dollar. It’s dollar.
Rajeev Gupta
It’s dollar, yes.
Nitin Padmanabhan
It is dollar. Okay, okay, okay, okay. And see, so far, despite we see very strong deal wins. Obviously, we have had leakage in the business, and that’s been sort of a drag. Do you think this year onwards, we should start seeing the 13% to 15% sort of CAGR beginning to show from this year itself? Or you think it will be a little beyond that was the question. The — only other thing is from a growth perspective, do you believe that at least from an automotive perspective or in terms of the large accounts that you have, the largest account is $50 million plus. When do we really start seeing for our scale, at least a few hundred million kind of accounts that we’re setting with?
Amit Chadha
Okay. So I’ll take part of that question. Number one, we’re not providing any annual guidance. So I’m not going to fish in the waters of what will be next year. All I will say is 13% to 15%, and we are working towards various deals in place. Let’s see what closes first, what closes second. I can assure you we will be faster than the industry, will be better than the industry. and engineering industry and IT industry of our size, right? That’s one. Second, is that in terms of accounts? Our last investor meet, which I think we did last year of the year prior Investor meet?
Rajeev Gupta
Yeah, two years ago.
Amit Chadha
Yeah, yeah, two years ago. We had created a plan to get to 100 million accounts. Our aspiration, if I may then, is to have X number of 100 million accounts, Y number of 50 million accounts. I’m happy to share that we finally were able to deliver a $50 million account trailing 12 months in this quarter. This is the first one after a long time for us. And there is a path forward. In fact, the fact that we are moving, having Alind, the focus entirely a very senior member of the Board of the company, been with us for as long as I’ve been there in the company, to focus only on large deals and growth markets should signal to you that there is a lot of seriousness in the organization towards this. So please allow us some time. So what is most of this is organic — so it takes a little time to build out, we’ll see at these quarters.
Nitin Padmanabhan
Perfect. Just one last clarification. From an earlier practice of this annual guidance, we are moving away from that permanently, is that it? Or is this only for this year?
Amit Chadha
Again, can I take the fifth and say I don’t know. See, we’ll see. At the end of it, there’s no reason to not provide something or provide something. We’re comfortable as we look at our five years, if I go back and look at the thesis of the company. See, we are here to build and stay and grow, right? We are not — that’s a long-term objective of the company. That comes from the L&T parent parentage, right? So the whole idea is to take longer-term decisions and deliberative steps to move. Thematically, if you look at it, the company would like to deliver CAGR sooner than later. But to be seen, to be tested.
Nitin Padmanabhan
Perfect. Thank you so much, and all the best.
Amit Chadha
Thank you, sir.
Operator
Thank you. The next question comes from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Dipesh Mehta
Thanks for representing. Just first on clarification, sorry, between this continued and overall combined business, I think, margin gap seems to be 40 basis points in FY26. So, headwinds from SWC used to be only 40 bps, or there are any one-offs in the numbers?
Rajeev Gupta
Dipesh, I can take it. So what — I mean, we did talk about realignment of portfolio back in quarter three. So what you see as SWC revenues has actually come down from Q3 onwards, and it was a deliberate intent. So while it assumes that there is only a 40 bps improvement, actually, it’s much more than that. It’s closer to almost 70 bps to 80 bps of improvement.
Dipesh Mehta
Rajeev, my question was FY26 combined business, you reported 14.1% margin, and continuing operation, you reported 14.5% margin for the full year. which in a vague impression SWC dilution was around 40 bps. That is what I just want to understand.
Rajeev Gupta
What we can do Dipesh, maybe we’ll have Sandesh talk offline and give you clarification because — second question. Yeah, go ahead.
Dipesh Mehta
Yeah, second question is about the bet, which we have indicated, let’s say, about the six technology bet and obviously, five focus areas. Can you provide some, let’s say, current mix of the business around those? How big are those businesses currently in overall scheme of things? And what kind of growth and investment you intend to make in each of them?
Amit Chadha
Sure. So right now, as we look at it for these bets that we have got, if you give me a minute, I will — exactly this contributes to approximately about Investments as we do this. Alind take a minute and talk about the investments, while I bring up the exact data. Can you hear me? Yes, now we can hear you. Would you like to talk about some of the investments that we’re making?
Alind Saxena
Yeah. Yes, yes, yes. See, when you look at it broadly, the space that we have to ourselves, given the customers that we work with, is around the whole physical AI. And where we have very consciously looked at making investments and we can walk you through all the different segments that we have, is to continue to deepen our presence in this area. That includes the collaboration that we are doing, which you may have seen on our posting as well earlier. But that’s where we are investing and ensuring that we bring those solutions back to our customers in the physical AI space, which is very unique to us and our business. So that’s one.
Two we — if I were to go by segments, we have talked about the investment that we have made in solutions and STV that continues to be there for us. And if anything, we are actually doubling down to increase more on connectivity and STV solutions. So that’s there. On the mobility side, similarly extending to sustainability, we are in a very unique position where we work with bringing AI in construction-related areas, as well as the investment in data center AI and data centers. So those two again become very formidable for us.
In tech, we have talked about where earlier, we working with hyperscalers closely and working on the solutions that they have in building their own solutions to bring it back to our customers across the industry that we work with. That’s the philosophy, and that’s what we are very clear that will give us the edge to be closer to our customers and continue to grow with them. I’ll take a pause, and if you have a follow-on question on this.
Amit Chadha
Yeah. And then if you want to take a minute and talk about the EI pivot and the software pivot that you’re doing, and then I’ll give the numbers.
Rajeev Gupta
Yeah, sure. Hi, Dipesh, good to meet you here. Let me explain what we are doing on the — yeah, because that’s where the bulk of pivot shift is going to happen. We are looking at AI in three distinct parts. One is to help improve our productivity. So we have a bunch of products we have created. We’re going to make them robust enough so that they can deliver anything between 10% to 30%, 40% productivity in the work that we do. So that’s one part of the AI that we are building. The second part of the AI is to embed this in the processes for client-end processes. So, for example, if somebody is running a supply chain, I can optimize that. With the inventory, I can optimize that. You have a maintenance cost, I can probably do a preventive maintenance and optimize that.
And the last bit is to embed AI in the products, which will go to my customers’ customers. So some of the physical AI that Alind was referring to are like products that will go into my customers. Now these three pivots will require us to do a lot of solutioning, do a quick prototyping, delivering solutions on an AI stack. And as you know, as AI stack is constantly going to keep evolving. So we are going to invest heavily in uplifting not just talent also building tools, bringing alliances, which can actually help us deliver this. So there’s a significant shift happening in our business due to AI across the board processes for the client, processes of our SDLC, PDLC, and the products that will go out to the customer.
Amit Chadha
Thank you. So Dipesh, to answer your question, less than 50% of the revenue today comes from these bets. In five years’ time, we expect more than 70% of business to be coming from these 6 banks.
Dipesh Mehta
Okay, thank you.
Amit Chadha
Thank you.
Operator
Thank you. Your next question comes from the line of Shradha Agarwal from Amsec. Please go ahead.
Shradha Agarwal
Yeah, hi, am I audible?
Operator
Yes, ma’am, you’re audible.
Shradha Agarwal
Yeah. So two questions, Amit. I think in one of the comments you indicated that apart from SWC restructuring, there were some other restructuring as well in which there was an impact of $19 million. So what does that relate to?
Amit Chadha
What is the second question?
Shradha Agarwal
Second question is, we’ve seen a smart headcount addition of almost 3% to our base. So, is it in anticipation of some large deal ramp-ups that we can expect? And also in terms of restructuring, are we done with all low-margin businesses realignment? Or are there any other businesses that we need to think about going ahead?
Amit Chadha
Thank you so much. So let me answer the happy question first. Headcount has gone up. We’ve added about 500 people net in the company, or 400 net in the company quarter-on-quarter. We do expect to add another 500 sometime in quarter two — quarter one, quarter two, quarter three as well. Because we believe that there’s this new skill set around the forward deployment engineer that is required. It requires a lot more and a slightly different skill set. So we are bringing people on as we speak, and this is for billable headcount. And it is in anticipation of ramp-up of wins that we have had, so this is not future business, we are ramping up current business, we are amping up for business that is already won. So therefore, there is some sure-footedness around the reason why we have added. So when we — right, so that’s that answer.
Now, in terms of the $19 million that I talked about annualized, that you can see that impact coming out in shrinkage of Q3 to Q4 or Q4 over Q3 in continuing business. And that has been a deliberate attempt. There has been some work that we were doing in a certain geography in the Middle East, which we shut down and we talked about it in the last quarter. There is a little bit in Europe that we’ve shut down, there was in telecom, Infra. There was a couple of low-margin non-value-add businesses that we were on. We returned the lab equipment and shut that down very respectfully for the client. As far as I’m concerned, this completes the entire restructuring and cleanup that we had to do. We do believe going forward, you will see growth in the continuing portfolio as we move forward.
Shradha Agarwal
Great, thanks. Amit, if I can squeeze in one more question. I know that you advanced the margin guidance, but without giving any timeline to it. But now we have two tailwinds: one coming from SWC going away, the second from rupee depreciation. So can we expect an 8% margin by as soon as second half of ’26 itself?
Amit Chadha
Shradhha, we just got the CFO promoted to the Board. You’ve got to be nice to him at least today, right? And he has also improved. He’s also brought it forward. This is what he said. He said Q4 or prior. Now if you want him to say H2 or prior, I don’t know if you can say that right now. But look, at the end of it, we want to say what we can deliver. And we are very sure about Q4 or prior. We’re working towards it. So Rajeev, if you want to add anything?
Rajeev Gupta
No. I think that’s being nice to me. You already said it. Our intent is to deliver quarter four or prior, but we certainly have advanced it. And you have seen the results of quarter four. I mean, what we talked two years to three years ago in terms of margins were a lot lower, right? We were talking more 13.3%, 13.6%. We are now at 15.2%. So it has certainly accelerated. I’ve talked about the timelines and that — I mean, we’ll continue to work around it.
Amit Chadha
Got it. Thank you. And the only other thing I’d like to add, so the only thing I would like to add there is, please, again, look at continuing business and look at the gross margins there. I think we are in a good state now, knock on wood. As I look forward with the differentiated service offerings that we have got and the deep client relationships, I do believe and hope that you will see improvement in growth in margin growth.
Shradha Agarwal
Thank you.
Operator
Thank you. Your next question comes from the line of Bhavik Mehta from JP Morgan. Please go ahead.
Bhavik Mehta
Hi, thank you. Just one question, Amit. On AI, how are the client conversations progressing across the three different segments? Because on the IT services side, you do get a lot of ask from clients for product pass-throughs or pricing discounts. But curious to hear in the R&D how the operations have progressed over the past few months, maybe even development on the AI kind of things since February, March?
Amit Chadha
Sure. Bhavik, just like Munjay was mentioning, there are three parts to what we are seeing. Number one is efficiencies in PDLC and SDLC. So that is being — one is being asked for by clients. But second, we are ourselves implementing our own tools to bring it about to almost all our programs. This is a work in progress right now, 65% of the company or 60% of the company has been trained on AI tools. Another 40% is being done to be completed in the next six months, right? So that is SDLC, PDLC. In fact, website also shows a couple of tools that we have developed that are already industrialized and being improved, right, taking control of that, taking it forward.
The second part is all about the Genentech AI, IQ platform that we have launched for engineering and manufacturing. There are specific engineering work processes, we are doubling to change in that. We are actually partnering with industry majors to see if we can bring their tools in to take it forward. So that’s the second area that we are doubling, playing with.
Third is physical AI, which can be broken up into industrial AI and device AI. And that, again, is a new area that we are trying to implement and add on. So we are definitely seeing a lot more conversations on AI, a lot more what can be done usability improvement, etc. And of course, trends are also changing. People are wanting to put more money in AI. It’s actually a bold question that is coming down to the engineering head as opposed to engineering head reply taking it ground up.
So some work to be done in engineering and manufacturing, AI will come in, but it will take over the course of this year and next 18 months to expand. And I do believe still, Bhavik, we are about six months, eight months ahead of competition in the cycle. So if we continue to keep our head up and continue to work hard, I do believe that we will become a net positive and tailwind for all of us.
Bhavik Mehta
Okay, got it. Thank you.
Operator
Thank you. Your next question comes from the line of Rahul from Dolat Capital. Please go ahead.
Rahul Jain
Hello. Yeah, I just wanted to clarify on this charge of exceptional cost that we have done in the quarter. Can you let me know what — for what business this was done? And is there anything more to happen on this going into next year?
Rajeev Gupta
Rahul, I can take this question. This is Rajeev here. So Amit did talked about $19 million of annualized business, right, particularly in Europe and in Israel and parts of UK. This restructuring cost actually entails towards those businesses and, of course, adjoining people and facilities that have been recorded in Q4. And like Amit said, we reconfirm that there are no more restructuring costs to continue from here on.
Rahul Jain
And from a revenue point of view, is there some part of the revenue from this business still in Q4, which may not happen in Q1?
Rajeev Gupta
There is no revenue in Q4 because we took quite a few of these actions at this — probably the end of Q3 or start of Q4, and hence, you see no revenues for these businesses in Q4.
Rahul Jain
Right. And just one last thing. If I take the outlook that you shared in the previous analyst meet. Our current — this five-year objective actually increases the expected growth rate over the next five years and four years. And at the same time, it talks about a lower margin than what we said a year back. With SWC transaction, I think our margin thought process should have improved, while growth numbers should have cut down given the $90 million exit. So why there is a difference between what we were thinking then versus now?
Rajeev Gupta
Rahul, again, this is Rajeev, I can take that because, of course, we’ve talked about our Lakshya FY31 aspiration to deliver at a CAGR of 13% to 15% band on revenue growth. As for EBIT margins, I reiterate that the aspiration is to deliver mid-16% levels, quarter four FY27 or prior, and we are working towards it. The 16% to 17% range over the course of the next five years, in line with Lakshya FY31 strategy, is to keep in mind that this growth might have some tuck-in acquisitions. And as you would appreciate, right, any tuck-in acquisition might have some dilution impact. So we will maintain the margins in that band. It’s reducing, but actually, it’s maintaining the band over a period of five years.
Rahul Jain
And just lastly from my side, I think this has been said earlier that you’re not sharing the outlook for this particular fiscal, but looking at the situation that we are in, is it possible to share some thought process whether it will be double digit, or any qualitative way to represent it?
Amit Chadha
Better than industry is, what I would say.
Rahul Jain
Sure. Thank you. That’s it from my side.
Amit Chadha
Thank you, Rahul.
Operator
Thank you. Your next question comes from the line of Karan Uppal from PhillipCapital India. Please go ahead.
Karan Uppal
Yeah, thanks for the opportunity. I have two questions from my side. Firstly, any impact of the Middle East War, crude price volatility you are seeing in, let’s say, the plant engineering business, especially in some of the sub-segments like oil and gas, CPG, chemicals, any impact in your council split that could have an impact on the overall sustainability vertical. That is one. Second is the six big banks, which you talked about. Any M&A you are planning to do in any of these six big banks, if you can also share the size of it? And a subpart to that question is that will you be open to take fixed call margins again because of M&A.
Amit Chadha
Yeah, those are the two questions. All right. So one Middle East plant. The Middle East is a very small piece of our operations. Of course, we can look at growth there. We’ll see — we hopefully believe that over a five-year period, we do believe that plant in Middle East will grow for us. But let this situation get resolved. Will it have an impact on our current quarter or next quarter? The answer is no. Again, it’s a very small part of our operations unless something drastic happens in mid-stage, that very small piece is at risk. So normal course of time no. Six bets have already shared the amount of revenue. My request will be that we will hold an Investor Day sometime in the year. We’ll walk you through the six bets and it will be on our website. So at that point, we’ll spend a lot more color and time on it for you. What was your third question?
Karan Uppal
I mean, are you open to take a hit on margins again because of energy?
Amit Chadha
Eah. So Rajeev.
Rajeev Gupta
Karan, we talked about tuck-in acquisitions. We are not thinking of any large acquisition at this stage. I think the acquisition that we made of IntelliSwift start of last year has panned out well. We continue to build our software capability. In fact, Munjay is leading the entire effort of building the software and AI horizontal for the company. So at this stage, we are not talking of any large acquisition. There are more tuck-in acquisitions and hence, I have given an EBIT range of 16% to 17%. But much like Amit mentioned, when we host the Investor Analyst Day, we’ll give you more clarity on big bets investments and related M&A.
Karan Uppal
Cool. Thanks. Thank you.
Operator
Thank you. We will take that as our last question for today. I now hand the conference over to Mr. Sandesh Naik for closing comments.
Sandesh Naik
Thank you. Thank you all for joining us on the call today. We hope we were able to answer your queries. We look forward to interacting with you throughout the quarter. Wish you all a very good evening and a good day. Thank you.
Operator
[Operator Closing Remarks]