How L&T's IT Units LTIMindtree and LTTS Missed Ambitious 2026 Growth Targets
When Larsen & Toubro Ltd (L&T) unveils its next five-year strategic roadmap, the conglomerate will have significant lessons to ponder regarding the ambitious expansion plan for its IT subsidiaries, which rank among India's top 10 technology services businesses today. The group's IT twins, LTIMindtree Ltd and L&T Technology Services (LTTS), are collectively poised to fall substantially short of the parent company's stated aspirations from five years ago, set under the Lakshya 2026 initiative.
Ambitious Targets and Current Reality
In 2021, L&T's IT businesses generated revenues of ₹25,463 crore, accounting for approximately 19% of the conglomerate's consolidated top line of ₹135,979 crore. The ambitious Lakshya 2026 roadmap envisioned that the IT segment would grow to contribute ₹73,980 crore, or about 27% of L&T's total revenue by the end of March 2026.
However, in the first nine months of the current fiscal year, the IT business revenue totaled ₹39,419 crore, representing roughly one-fifth of L&T's ₹2,03,112 crore revenue. With only one quarter remaining, parent L&T's consolidated revenue may surpass its stated goal of ₹274,000 crore, but the IT business's revenue appears destined to miss its target significantly.
Assuming the two IT businesses achieve 10% growth in the current fiscal year, they would conclude with approximately ₹53,546 crore—at least a quarter less than the ambitious goal established five years earlier. This underperformance has raised questions about the factors contributing to the shortfall.
External Headwinds and Macroeconomic Challenges
Multiple external factors have contributed to the IT businesses' underperformance relative to their competitors and L&T's core engineering and construction operations. According to industry analysts, a macroeconomic slowdown driven by global uncertainty and the rapid emergence of artificial intelligence has compelled many IT firms to recalibrate their growth expectations.
The imposition of tariffs by US President Donald Trump triggered a protectionist wave, causing numerous Fortune 500 companies to curtail their IT spending. India's Big Five IT services firms—Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd—are anticipated to report tepid growth for the year ending March 2026, marking the third consecutive year of soft expansion.
These industry leaders are not expected to achieve growth exceeding 4.5% in constant currency terms for the full year. Abhishek Pathak, lead analyst for IT services and internet at Motilal Oswal Financial Services, noted, "After the COVID-19 pandemic, non-essential discretionary IT spending reduced drastically, which is why the two companies did not grow at the pace once imagined."
Amit Chandra, vice-president at HDFC Securities, added, "L&T's goals for 2026 were set assuming an IT boom following the pandemic. However, the rise of automation resulting in revenue deflation and reduced demand for IT services due to international tariff wars caused sector growth to drop from double digits to low single digits, adversely affecting both companies."
Internal Challenges: Merger Complications and Leadership Churn
The construction-to-software conglomerate also encountered significant internal obstacles. The merger of Larsen & Toubro Infotech (LTI) and Mindtree in May 2022 proved more complex and time-consuming than anticipated, accompanied by cultural integration challenges.
Chandra explained, "The merger took longer than expected and there was a cultural mismatch. In addition, exits following the merger, along with unclear sales incentives for executives and a lack of sales rigor in the merged entity, hampered growth."
This consolidation triggered considerable leadership turbulence. Initially, LTI's CEO Sanjay Jalona departed after Debashis Chatterjee was appointed CEO of the merged LTIMindtree in November 2022. Three years later, Chatterjee left in June 2025 before completing his term, leading to the appointment of Venugopal Lambu as the new CEO.
This leadership transition precipitated an exodus of other senior executives from both Mindtree and L&T Infotech, consequently slowing growth momentum. While Mindtree and LTI reported impressive growth rates of 31% and 26%, respectively, in the year ended March 2022, the merged LTIMindtree's growth decelerated to 17.2% in FY23, followed by modest increases of 4.4% and 4.8% in FY24 and FY25, respectively.
Missed Opportunities in Automotive Engineering
LTTS faced its own distinct set of challenges, particularly in capitalizing on the automotive engineering, research, and development (ER&D) wave. Pathak observed, "For LTTS, the company missed the auto ER&D wave, whereas peers including KPIT and Tata Elxsi capitalized on it. They could not generate substantial revenue from automotive spending, which is a key reason for not growing at a faster pace."
Although LTTS does not separately disclose revenue from automobile manufacturers—grouping it under the mobility segment, which constitutes about one-third of its business at $414 million—comparisons with competitors reveal missed opportunities. LTTS's mobility vertical grew 47% over the last three years, while KPIT Technologies' revenue from automakers more than doubled to $666 million during the same period.
Similarly, Tata Elxsi's revenue from its transportation vertical more than doubled to $213 million. Notably, KPIT derives 96% of its business from providing software services to car manufacturers, highlighting its focused strategy in this high-growth sector.
Comparative Performance with Smaller Peers
The growth trajectory of L&T's combined IT business has noticeably slowed compared to smaller industry counterparts. Between March 2021 and December 2025, the combined IT business (including LTIMindtree and LTTS) reported a compounded quarterly growth rate (CQGR) of 3.74%.
In contrast, smaller peers such as Coforge Ltd and Persistent Systems Ltd demonstrated significantly stronger performance, with CQGRs of 6.52% and 6.64%, respectively. This disparity underscores the competitive challenges faced by L&T's IT units in a rapidly evolving technology services landscape.
As L&T prepares to formulate its next strategic plan, the experience of its IT subsidiaries offers crucial insights into the intersection of ambitious goal-setting, external economic forces, internal organizational dynamics, and competitive market positioning in India's technology sector.
