L&T’s Earnings Rally Puts Order Growth and Margins in Focus
A strong quarter and record order inflows lifted the shares, while softer margins remain an important measure of execution quality.
Larsen & Toubro reported a 33% rise in second-quarter consolidated profit and 16% revenue growth, alongside order inflows of ₹1.48 trillion. Its shares climbed as much as 6% in intraday trade, although EBITDA margin contracted, leaving investors to weigh strong demand and execution against profitability pressures.
Profit and revenue advanced, but margins narrowed
L&T’s consolidated profit after tax rose to ₹5,202 crore in the quarter ended September 2026, from ₹3,926 crore a year earlier. Revenue increased 16% to ₹78,750 crore, supported by progress across businesses in its Projects, Products & Manufacturing (PPM) portfolio.
The quality of that growth was more mixed at the operating level. EBITDA grew just 0.6% year on year to ₹6,845 crore, while EBITDA margin, excluding other income, fell 130 basis points to 8.7% from 10%. The company attributed the decline primarily to a higher PPM share of revenue and lower margins across businesses.
Brokerage commentary also pointed to cost pressures in Water & Effluent Treatment projects, supply-chain costs and a larger share of projects that have yet to reach the margin-recognition threshold. For investors, the gap between revenue growth and EBITDA growth makes margin recovery and the pace of project execution key indicators to track in subsequent quarters.
A larger order book supports visibility
L&T secured orders worth ₹1.48 trillion during the quarter, up 28%. High-value wins came from Hydrocarbon, CarbonLite Solutions, Public Spaces & Airports, and Power Transmission & Distribution. The group’s order book reached ₹8.5 trillion at the end of September, 15% higher than in March 2026; international orders made up 54% of the total.
A sizeable order book can provide multi-year revenue visibility, but conversion into reported growth depends on timely execution and project economics. Analysts cited continued momentum in Middle East Hydrocarbon projects and high-value energy orders, while noting geopolitical uncertainty and supply-chain challenges. Those factors make the order book’s composition and delivery—not just its headline size—important to monitor.
Guidance holds; delivery remains the test
Management maintained its FY27 targets of 10–12% growth in order inflows and revenue, with PPM EBITDA margin guidance at about 7.8%. It also revised its net working capital-to-sales target to less than 10%, from 10% earlier. Brokerage notes highlighted a near-term prospect pipeline of approximately ₹10.3 trillion for the rest of FY27 and described working-capital efficiency as supportive.
One brokerage estimated that the pipeline, historical win rate above 20% and first-half inflows of ₹2.1 trillion supported the company’s FY27 inflow ambition of ₹3.9 trillion to ₹4.0 trillion. It retained a Buy rating and an unchanged ₹4,400 target price. That is an analyst view, not a certainty: meeting guidance will depend on winning prospective work and executing projects profitably.
Key Highlights
- Q2 consolidated PAT increased 33% to ₹5,202 crore.
- Revenue rose 16% to ₹78,750 crore, while EBITDA grew 0.6%.
- EBITDA margin narrowed 130 basis points year on year to 8.7%.
- Quarterly order inflows grew 28% to ₹1.48 trillion.
- The ₹8.5 trillion order book was 15% higher than in March; international orders formed 54% of the total.
- FY27 growth guidance was maintained, with execution and margins still central monitorables.
Investor Note: The sharp share-price response reflects the strong profit, revenue and order figures, but one quarter does not settle the outlook. Investors may want to assess whether order growth converts into revenue while margins improve, and weigh brokerage targets against the execution and cost risks identified in the results.
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