Fundamental Report Larsen & Toubro Limited (L&T)

Segment-Wise Performance

Infrastructure Projects Segment

• Infrastructure Segment Order Inflows: The flagship Infrastructure Projects segment secured order inflows totaling ₹199,064 crore during the FY26. This represents a steady growth of 15% YoY, driven by high-value project wins in renewables, power transmission, and heavy civil construction.
• International orders constituted 59% of the total order inflow of the segment during the year aided by receipt of major orders in the Renewables, Power Transmission & Distribution and Heavy Civil Infrastructure businesses.
• The segment secured orders of ₹ 43,477 crore, during the Q4FY26, registering growth of 26% over the corresponding quarter of the previous year. International orders constituted 67% of the total order inflow for the quarter.
• Infrastructure Segment Backlog: As of March 31, 2026, the cumulative order book for the Infrastructure Projects segment reached ₹422,562 crore. International orders accounted for 48% of this massive segment backlog, anchored by substantial infrastructure development programs spanning multiple overseas geographies. 
• Infrastructure Revenues and Execution: Annual customer revenues for the infrastructure segment saw a subdued growth of 3%, totaling ₹133,910 crore. This slower execution pace was primarily due to severe localized challenges in domestic water infrastructure jobs, which were heavily impacted by strict project funding constraints. International revenues constituted 45% of the total customer revenues of the segment during the year.
• The segment recorded customer revenues of ₹ 39,694 crore for Q4FY26, registering a YoY growth of 2%. International revenues constituted 44% of the total customer revenues of the segment during the quarter.
• Infrastructure Operational Margin Expansion: The segment achieved an improved EBITDA margin of 6.9% for the full financial year, up from 6.4% in the prior year. This 50 bps operational margin expansion was driven by substantial execution cost savings and better project management efficiencies.

Energy Projects Segment

• Energy Segment Order Surge: The Energy Projects segment delivered exceptional performance, securing order inflows valued at ₹136,921 crore during FY26. This marks a massive 56% YoY surge, driven by high-value domestic and international order wins across the Hydrocarbon and CarbonLite Solutions businesses. International order inflow constituted 60% of the total order inflow during the year.
• The Energy segment secured ₹21,296 crore in orders during Q4FY26, down 34% YoY due to a high-base effect from last year. Highlighting an aggressive global pivot, international projects dominated the segment, constituting an impressive 80% of total quarterly inflows.
• Energy Segment Backlog Position: The overall order book for the Energy Projects segment climbed to ₹258,472 crore as of March 31, 2026. International projects represent a significant 67% share of this backlog.
• Energy Segment Revenue Performance: Driven by aggressive execution, annual customer revenues for the Energy segment rose 35% YoY to ₹54,865 crore. International markets generated 74% of these revenues, reflecting deep operational maturity and accelerated project timelines across the global hydrocarbon portfolio.
• The Energy segment’s annual EBITDA margin declined to 6.8% from 8.5% in the previous fiscal year. This margin compression was primarily caused by severe cost inflation affecting a few legacy turnkey projects within the traditional Hydrocarbon engineering business.

Hi-Tech Manufacturing Segment 

• Hi-Tech Segment Order Decline: The Hi-Tech Manufacturing segment reported a 54% decline in annual order inflows, totaling ₹8,366 crore. This sharp contraction was primarily due to a high-base effect from the previous year’s massive contract bookings in the Precision Engineering & Systems (PES) division. Export orders accounted for 32% of the total order inflow of the segment during the year.
• The Hi-Tech Manufacturing segment reported order inflows of ₹1,727 crore for the Q4FY26, representing a 24% YoY decline compared to the corresponding quarter of the previous fiscal year. This moderation is primarily attributable to the deferment of targeted domestic orders. On the international front, export orders remained steady, accounting for 25% of the total order inflow during the quarter.
• As on March 31, 2026, the segment order book stood at ₹ 35,312 crore, with export orders contributing 13% to the total.
• Hi-Tech Revenue and Margins: Despite lower order bookings, the segment’s annual customer revenues grew 46% to ₹14,109 crore due to strong execution pacing. The segment recorded a solid EBITDA margin of 16.7%, reflecting the execution stage and specific job mix of the projects. For Q4FY26, customer revenues of ₹4,861 crore, registering a stellar 45% YoY growth. International orders accounted for 15% of total segment revenues.
• Hi-Tech Strategic Nuclear Deliveries: L&T’s Heavy Engineering business achieved a critical milestone by delivering seven massive steam generators ahead of schedule under India’s 700 MWe PHWR fleet program. The segment also formed multiple strategic partnerships in heavy engineering and precision aerospace systems.

IT & Technology Services (IT&TS) Segment 

• IT&TS Corporate Rebranding: L&T completed a significant corporate rebranding exercise, officially changing the name of its listed IT service subsidiary from ‘LTIMindtree Limited’ to ‘LTM Limited’. Annual customer revenues for the IT&TS segment rose 12% YoY to hit ₹53,497 crore. International billing contributed 92% of the total customer revenues of the segment for the year ended March 31, 2026.
• The segment delivered resilient performance, reporting Q4FY26 revenues of ₹14,078 crore, a solid 13% YoY growth. International billing remained the primary growth driver, accounting for a dominant 92% of total customer revenues. 
• For the FY26, the segment maintained operational efficiency, delivering a strong EBITDA margin of 19.5%, in line with the previous year.
• Data Center Infrastructure Scaling: L&T rebranded its data center business as ‘Larsen & Toubro – Vyoma’ (formerly L&T-Cloudfiniti) and commissioned a 12MW data center capacity at Sriperumbudur. Concurrently, LTTS announced plans to divest its Smart World Communication (SWC) business to focus on Engineering Intelligence.

Financial Services Segment

• Robust Revenue Growth: Driven by focused and higher disbursements within the retail portfolio, the segment recorded full-year income from operations of ₹17,283 crore, marking a strong 14% YoY growth. Quarterly operational income for Q4FY26 scaled to ₹4,669 crore, registering an impressive 22% YoY acceleration.
• Loan Book Expansion & Retail Pivot: The total Loan Book expanded by 25% YoY to ₹121,728 crore as of March 31, 2026, up from ₹97,762 crore in March 2025. Demonstrating a near-complete transition to core consumer lending, the Retail Loan Book constituted 98% of the total book.
• Enhanced Profitability: Supported by aggressive disbursal momentum and strong asset quality, full-year Profit Before Tax (PBT) rose to ₹4,032 crore, representing a 15.5% increase over the ₹3,491 crore reported in the previous fiscal year.

Development Projects Segment 

• The segment recorded full-year customer revenues of ₹5,117 crore, registering a 5% YoY decline. This reduction is primarily attributable to a lower Plant Load Factor (PLF) at the Nabha Thermal Power Plant and the absence of any transit-oriented development (TOD) monetization during the current fiscal year.
• For the final quarter ended March 31, 2026, the segment clocked customer revenues of ₹1,175 crore. This mirrors the full-year trajectory, registering a identical 5% YoY decline compared to the corresponding quarter of the previous fiscal year.
• Full-year EBIT stood at ₹539 crore, down from ₹716 crore in the previous year. This drop is largely due to a high-base effect, as the previous year’s earnings included a significant one-time monetization of commercial property by the Hyderabad Metro SPV.

Others Segment 

• Portfolio Structure: The “Others” segment encompasses L&T’s diversified businesses, including Realty, Industrial Valves, Construction Equipment & Mining Machinery, and Rubber Processing Machinery.
• Annual Revenue & Export Mix: Full-year customer revenues remained stable at ₹7,093 crore, compared to ₹7,065 crore in the previous fiscal year. Driven primarily by strong overseas demand for Industrial Valves, international export sales constituted 15% of total annual revenues.
• For Q4FY26, the segment recorded customer revenues of ₹1,690 crore, representing a 29% YoY decline. This contraction was heavily impacted by a lower volume of residential unit handovers within the Realty business during the quarter. However, the export mix improved, accounting for 21% of quarterly revenues.
• Despite quarterly revenue headwinds, full-year EBITDA margin expanded to 31.3% (up 210 bps from 29.2% in the previous year). This profitability enhancement was primarily driven by a highly favorable and improved product mix across the segment.

FY27 Guidance & Management Outlook:

• Management is actively collaborating with international clients to establish alternate transportation routes and logistics arrangements to successfully bypass shipping constraints and minimize construction delays in the Gulf region.
• Under the newly unveiled 5-year strategic plan, Lakshya 2031, L&T has restructured its segment reporting framework to formally designate the core business as Projects, Products, and Manufacturing, completely separating Realty.
• L&T has unified its renewable energy capabilities under a dedicated Green Energy reporting segment within the PP&M structure, combining solar EPC, onshore wind, and offshore wind programs under a single operational banner.
• The Development Projects segment is shifting away from traditional concession assets and will focus exclusively on green asset ownership, including operating green hydrogen and green ammonia production facilities under a BOO framework.
• The Manufacturing and Products portfolio will prioritize complex advanced engineering, indigenization of defense platforms via R&D and intellectual property creation, and scaling up positions in industrial electronics, robotics, and automation.
• The Realty business plan outlines a highly disciplined growth strategy targeting 100 million square feet of mixed development, focusing on high-return premium markets like Mumbai and NCR to prepare for market-facing listing readiness.
• LTIMindtree targets doubling its revenue over the next five years, while the data center business plans to scale its capacity to 200 MW via hyperscale alliances and AI-ready private cloud offerings.
• L&T has outlined specific capital outlays under Lakshya 2031, including ₹15,000 cr for Green Hydrogen, ₹10,000 cr for Data Centers, ₹5,000 cr for Industrial Electronics, and ₹3,000 cr for Semiconductors.
• Backed by a healthy ₹17.8 trillion project prospects pipeline, L&T has provided a formal guidance targeting a growth rate between 10% and 12% for both group order inflows and consolidated revenues in FY27.
• Management expects overall PP&M operating margins to remain stable at 7.8% for FY27, while guiding net working capital to normalize around 10% of sales as substantial customer advances get progressively utilized.
• Over the five-year horizon of the Lakshya 2031 plan, L&T confidently aims to deliver a revenue CAGR of 12% to 15% and achieve a consolidated Return on Equity within the range of 16% to 17%.

Profit and Loss Statement:

Outlook

L&T is a leading global conglomerate with a strong presence in engineering, procurement and construction (EPC), technology, and high-tech manufacturing. It is known for its execution excellence, innovation, and high-quality standards in delivering complex infrastructure and industrial projects. With a diversified business portfolio and a significant domestic and international presence, L&T has established itself as a market leader across multiple sectors.

It has delivered a healthy financial performance in FY26. Revenue from operations grew 11.8% and PAT also increased 7.2% compared to FY25, driven by strong execution across segments, particularly in Infrastructure and Energy. Earnings visibility remains exceptional, backed by a massive order book of ₹7,40,300 cr and a robust forward prospects pipeline of ₹17.8 trillion. Furthermore, under its Lakshya 2031 strategic plan, L&T has outlined a targeted capital expenditure program of ₹33,000 cr to drive long-term sustainable growth.

Under the Lakshya 2031 plan, L&T has committed ₹33,000 cr in capital outlays across green hydrogen, data centers, electronics, and semiconductors, aiming for a 12% to 15% revenue CAGR and 16% to 17% ROE. Backed by a ₹17.8 trillion project pipeline, the company expects 10% to 12% order and revenue growth for FY27, with stable operating margins at 7.8% and normalized working capital at 10%.

For FY26, the company reported an EPS of ₹116.88. At the current market price of ₹3,960 the stock is trading at a P/E multiple of 33.88x, which we believe represents a fair valuation at current levels. The US–Iran conflict had created downside pressure on the company, as the Gulf region is one of L&T’s key markets and a significant contributor to its international order inflows and execution pipeline. The conflict increased geopolitical uncertainty and raised concerns over project execution and fresh order inflows. However, if geopolitical tensions ease and the US–Iran conflict cools off, the company’s business outlook will improve. Accordingly, we recommend an ACCUMULATE rating on the stock with a target price of ₹5,200, implying attractive upside potential over the next 9–12 months.

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