This article first appeared on GuruFocus .
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Order Inflow:Record high INR1.48 trillion in Q2 FY '27, up 28% Y-o-Y; PPM portfolio order inflows at record INR1.26 trillion, up 32% Y-o-Y (domestic +49%, international +24%).
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Order Book:INR8.54 trillion as of September 2026, up 28% Y-o-Y; 46% domestic, 54% international; average execution period 33 months.
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Group Revenue:INR787 billion in Q2 FY '27, up 16% Y-o-Y; international revenue 58% of total.
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PPM Revenue:INR584 billion, up 20% Y-o-Y.
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Group EBITDA Margin (ex-other income):8.7% vs 10% in Q2 FY '26, impacted by lower margins and revenue mix shift toward PPM.
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PPM EBITDA Margin:7% in Q2 FY '27, down 30 bps Y-o-Y; FY '27 target of 7.8%.
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Group PAT:INR52 billion, up 33% Y-o-Y, driven by higher activity and treasury income.
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Net Working Capital:Record low 1.7% as of September 2026 vs 4.1% as of March 2026; expected to close below 10% guidance for the year.
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Collections (ex-financial services):INR740 billion vs INR600 billion in Q2 FY '26.
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Cash Flow from Operations (ex-financial services):INR128 billion vs INR48 billion in Q2 FY '26.
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ROE (trailing 12-month):16.7% vs 17.2% in Q2 FY '26, still reflecting prior-year labor court provision.
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Infrastructure & Utilities Segment:Order inflows INR355 billion, down 13% Y-o-Y; order book INR3.61 trillion; revenue +6% Y-o-Y; EBITDA margin 5.7% vs 6.2%.
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Energy Conventional Segment:Order inflows INR784 billion, more than doubled Y-o-Y; order book INR2.87 trillion; revenue INR173 billion, +29% Y-o-Y; segment margin 7.4%, down 80 bps; Hydrocarbon margins improved to 7.5% from 6.7%.
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Energy Green Segment:Order inflows INR66 billion, down 45% Y-o-Y; order book INR1,436 billion; revenue INR115 billion, +43% Y-o-Y; margins largely stable.
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Manufacturing & Products Segment:Order book INR429 billion; revenue INR45 billion, +34% Y-o-Y; margin improved on cost savings and better job mix.
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Technology Platforms & Services Segment:Revenue INR148 billion, +11% Y-o-Y, led by LTM and LTTS growth.
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L&T Finance:Return on assets healthy at 2.6% for Q2 FY '27; robust retail disbursements and improved asset quality.
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Realty Segment:Order inflows (L&T share of presales) INR13 billion; order book (unrecognized revenue) INR184 billion as of September 2026.
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Prospects Pipeline (PPM core, next 6 months):~INR10.3 trillion; Infrastructure & Utilities INR5.84 trillion, Energy Conventional INR2.07 trillion, Energy Green INR2.04 trillion, Manufacturing & Products INR0.33 trillion.
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FY '27 Guidance:Order inflow growth 10%12%; revenue growth 10%12%; PPM EBITDA margin target 7.8%.
Release Date: October 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Larsen & Toubro Ltd ( LTOUF ) achieved its highest ever quarterly order inflow of INR1.48 trillion, up 28% Y-o-Y, driven by ultra mega and mega orders in hydrocarbons and CarbonLite.
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The company's order book stood at a record INR8.54 trillion, up 28% Y-o-Y, providing strong revenue visibility with an average execution cycle of 33 months.
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Working capital management improved significantly, with net working capital at a record low of 1.7% of sales, down from 4.1% in March 2026, supported by customer advances and better collections.
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Larsen & Toubro Ltd ( LTOUF ) reported robust revenue growth of 16% Y-o-Y to INR787 billion, with international revenue contributing 58% of the total.
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The company is making strategic progress in new businesses: data centers (AI factory with 10,000 NVIDIA GPUs), semiconductors (40 new products), and green energy (offshore wind execution ramp-up).
Negative Points
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Group EBITDA margin declined to 8.7% from 10% Y-o-Y, impacted by lower margins across the portfolio and a higher share of the lower-margin PPM segment.
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Infrastructure and Utilities segment margins fell to 5.7% from 6.2% Y-o-Y due to cost pressures in the Water & Effluent Treatment (WET) business and a higher proportion of projects yet to reach margin recognition thresholds.
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Energy Green segment order inflows declined 45% Y-o-Y to INR66 billion due to deferral of certain solar projects in the Middle East.
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Logistics and supply chain challenges, particularly in the Middle East, have led to cost escalations and potential revenue deferment in the renewable business, with customer compensation negotiations ongoing.
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The divestment of L&T Metro Rail (Hyderabad) has been delayed, with the expected completion date revised from September 30 to December 31, 2026.
Q & A Highlights
Q: On the Energy Green segment, was Q2 revenue growth driven more by offshore wind ramp-up or Middle East solar execution, and how does the supply chain situation differ from infrastructure? A: CFO P. Ramakrishnan said the segment's Q2 revenue was driven mainly by solar, with offshore wind execution only just beginning and expected to pick up in coming quarters. President and Deputy Managing Director Subramanian Sarma added that logistics challenges are most relevant for the Middle East renewable business and, to some extent, power transmission, while infrastructure projects are at an early stage and less affected. For renewables, materials are taking longer to arrive and incurring extra costs; L&T is discussing with customers to either delay dispatch or get costs reimbursed, and some revenue deferment is possible, to be offset where possible by domestic and other-country projects.
Q: What is the scale of L&T's AI data center and semiconductor investment plans over the next one to two years? A: CFO P. Ramakrishnan said the 10,000 NVIDIA GPUs represent roughly USD 750 million of investment in the existing 30-megawatt data center near Chennai. L&T plans an additional 50 megawatts adjoining Sriperumbudur and another 30 megawatts, targeting over 100 megawatts of AI data center capacity in 1.5 to 2 years, with the balance 70 megawatts requiring new civil construction plus GPU investment at then-prevailing chip series. On semiconductors, investment so far has focused on building intellectual property across domains, and the business is expected to see revenue traction within the next one or two quarters as it begins selling designs and chips.
Q: With PPM net working capital at minus 4% of sales, how should investors view the domestic PPM working capital, which traditionally ran at 15%-plus? A: CFO P. Ramakrishnan said the domestic PPM working capital intensity has improved to around 12%-13%, helped by a higher share of private sector orders in infrastructure and utilities and CarbonLite Solutions, including residential, commercial buildings and factories. The international portfolio is likely at around minus 8% to minus 9%, compensating for the domestic positive working capital. He stressed that gross working capital also improved from 51.7% in March to 48% in September, with frequent billing milestones and timely payments, not just customer advances, driving the improvement.
Q: What is the opportunity size under the six-year EPC framework agreement with Petroleum Development Oman, and will margins be better than the overall hydrocarbon business? A: CFO P. Ramakrishnan said the framework covers six years, with order prospects targeted at roughly USD 6 billion to USD 7 billion over the next four to five years. L&T is one of four selected contractors, alongside an Egyptian EPC company, a Chinese company and a Korean company. The framework gives L&T the right to bid, but competitive intensity remains a factor. President and Deputy Managing Director Subramanian Sarma added that L&T will not bid unless it can secure a differentiated margin.
Q: How is L&T managing cost escalation and execution risk on the strong order inflow, particularly in the Middle East? A: CFO P. Ramakrishnan said most international inflows outside offshore wind came from hydrocarbons, where Middle East bidding remains robust and execution momentum has not been disturbed so far, though competitive intensity is strong. President and Deputy Managing Director Subramanian Sarma acknowledged cost escalation in logistics and insurance but said L&T is hopeful a good part will be compensated by customers, with good discussions underway; there could be timing mismatches between cost recognition and compensation. Solar order inflow is expected to pick up in the second half.
Q: What is driving the divergence between solid core EBITDA growth and the lower reported group EBITDA margin, which fell from 10% to 8.7%? A: CFO P. Ramakrishnan explained that around 80 basis points of the decline stems from segment-related margin compression, which is partly compensated through other income, while the balance 40 to 50 basis points comes from timing mismatches of costs booked at the corporate level. Some other income specifically attributable to segments is loaded into segment and PPM EBITDA, while the P&L shows EBITDA by nature. President and Deputy Managing Director Subramanian Sarma added that the margin should be viewed in the context of an extremely challenging external environment, and maintaining the EBITDA margin despite this is noteworthy.
Q: What is the status of the AMCA project bid and the defense opportunity pipeline, and what drove Precision Engineering export orders? A: CFO P. Ramakrishnan said the AMCA project comes up for bidding at the end of October, and L&T expects a larger share of marine opportunities versus land-based ones in India's defense sector. L&T has been working on various land-based platforms, with large orders expected depending on demonstrated localization content, though timelines are too early to comment on. The Precision Engineering export order came from Vietnam. On DAC approvals, the prospect pipeline looks more reassuring, with order inflow conversion most likely by the end of the year.
Q: What is the degree of dependence on the Strait of Hormuz for the hydrocarbon business, and is there an alternative if it remains contested? A: President and Deputy Managing Director Subramanian Sarma said some work from L&T's yards in Oman and elsewhere must cross the Strait of Hormuz, but shipping has not stopped; about 70% of pre-war oil barrels are still moving through the strait, though not publicly declared. L&T successfully moved a large consignment and is exploring ways to move the balance. He remains optimistic that shipments will get through, possibly with some delay.
Q: What is the outlook for infrastructure margins, which were impacted by the Water & Effluent Treatment business, and how should investors view medium-term margins? A: CFO P. Ramakrishnan said infrastructure margins would have been 40 to 50 basis points better excluding the Water and Effluent Treatment portfolio. The segment is also affected by a higher proportion of jobs yet to cross the margin recognition threshold. Funding for some WET projects has started resuming, but given long-dated projects, time and cost overruns will take time to convert into actionable claims, so some execution and margin pressure will persist. The rising share of private sector orders in minerals and metals and buildings and factories is a positive for margins.
Q: What is the rationale for L&T re-entering development assets such as green ammonia and data centers, given past troubles with such investments? A: CFO P. Ram
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
