🚧 Larsen & Toubro Q1 FY26 Results – Record Order Book, Global Growth, and Margin Watch Ahead
CMP: ₹3,642 | Result Date: 29 July 2025
1️⃣ Recent Insights & Strategic Highlights
From Management Commentary
✅ Record Order Book: ₹6.13 trillion – highest ever (+25% YoY).
✅ Robust Order Inflow: ₹945 bn (+33% YoY), driven by Infrastructure & CarbonLite Solutions; 46% from overseas.
✅ Strong Prospects Pipeline: ₹14.8 tn for remaining FY26 (+63% YoY), led by Hydrocarbon & Infra opportunities.
✅ Green Hydrogen Leadership: L&T GreenTech to build & operate a 10-KTPA plant for IOCL under a 25-year BOO contract.
✅ ESG Milestone: First Indian corporate to issue ESG bonds under SEBI’s framework; ₹5 bn raised at 6.35% coupon.
✅ L&T Finance Growth: Loan book crosses ₹1 tn; 98% retailization; secured international investment-grade ratings (BBB-).
⚠️ Margin Pressure: Hydrocarbon segment impacted by competitive legacy bids entering peak execution.
⚠️ Infra Softness: Higher costs & overruns in water projects affecting margins.
2️⃣ Consolidated Financial Performance
💡 Growth Drivers:
Strong execution in Hydrocarbon (+47% revenue) & Hi-Tech Manufacturing (+75%).
Higher other income (+47% YoY) and efficient treasury management boosted PAT.
3️⃣ Segmental Performance – Q1 FY26
📌 Key Observations:
Energy Projects and Hi-Tech Manufacturing are the biggest growth engines this quarter.
Infra margins remain slightly subdued due to cost overruns in water projects.
4️⃣ Geography-Wise Performance
🌏 Revenue Mix – Q1 FY26
India: ₹30,565 Cr (48%)
Middle East: ₹20,377 Cr (32%)
USA & Europe: ₹10,825 Cr (17%)
Rest of World (ROW): ₹1,912 Cr (3%)
💡 Takeaway: 52% of revenues are from overseas markets, led by Middle East projects in Hydrocarbon & Infra.
📦 Order Book – as of 30 June 2025
India: ₹3.31 tn (54%)
Middle East: ₹2.27 tn (37%)
ROW: ₹0.55 tn (9%)
💡 Takeaway: Balanced domestic-international mix, but Middle East forms 82% of international orders — concentration risk to monitor.
5️⃣ Order Flow & Pipeline
Q1 Order Inflows: ₹945 bn (+33% YoY) – Infra ₹410 bn, Energy ₹314 bn.
Order Book: ₹6.13 tn – well diversified across segments.
Prospect Pipeline: ₹14.8 tn for FY26 balance period, with Hydrocarbon prospects doubling YoY to ₹5.78 tn.
6️⃣ Profitability, Growth & Valuation Ratios
*Estimated from segment data
**TTM EPS ≈ ₹115
7️⃣ FY26 Estimates (Management + Trend-Based)
Sales Growth: ~20% for FY26.
Margins: P&M portfolio targeted at 8.3–8.5%; overall NPM ~6.8%.
Profit Growth: ~18% YoY driven by execution ramp-up & improved working capital.
8️⃣ Outlook
Near Term (Next 1–2 Quarters):
Sustained double-digit revenue growth from Energy & Infra.
Margins remain slightly pressured in Hydrocarbon until competitive bids conclude.
Long Term (FY27–FY30):
Strong alignment with India’s infra capex & global energy transition.
Growth in new-age areas — Green Energy, Semiconductors, Data Centers — will diversify revenue.
9️⃣ Conclusion for Long-Term Investors
Positives 👍
Record order book & strong project pipeline.
Consistent double-digit revenue & profit growth.
Diversified global presence.
Improved ROE, cash flows, and balance sheet position.
Risks ⚠️
Margin pressure from older competitive bids.
Geopolitical & oil price volatility in Middle East.
Execution risks in large, complex projects.
Investment View: Cautiously Optimistic – L&T remains a long-term compounding story, though investors should track margins and Middle East dependency.
Disclosure:
This analysis is provided solely for informational purposes and does not constitute investment advice. Investors should perform their own due diligence before making investment decisions.
