Detailed Narrative
Macroeconomic and Geopolitical Headwinds
India's economic growth remains resilient, supported by domestic demand and manufacturing expansion, though CPI increased from 3.4% to 4.4% due to food and fuel inflation. Global growth is expected to remain moderate, with softer growth in the U.S. and China. The Middle East continues to face logistical and trade disruptions from geopolitical uncertainty🌐, impacting energy markets and project execution, which influenced L&T's Q1 performance.
Q1 FY27 Financial Performance Overview
L&T reported group revenues of ₹679 billion, a 7% Y-on-Y growth, with international revenues contributing 51%. Group PAT increased by 14% Y-on-Y to ₹41 billion, driven by improved services business performance and higher treasury income. However, the group EBITDA margin (excluding other income) declined to 9.0% from 9.9% in Q1 FY26, primarily due to lower execution in the PPM business, forex variations in IT subsidiaries, and increased ECL provisions.
Robust Order Inflows and Order Book
The group secured order inflows of ₹1,080 billion, marking a 14% Y-on-Y growth, largely fueled by strong international ordering activity (up 27% Y-on-Y) and private sector demand in India. The total order book stood at ₹7.79 trillion as of June 2026, a 27% increase from June 2025, providing significant revenue visibility. The international share of the PPM portfolio increased to 55% from 49% in the previous year, with the Middle East accounting for 71% of the international order book.
Segmental Performance Highlights
Infrastructure and Utilities saw order inflows more than double to ₹444 billion, though revenue declined 3% Y-on-Y. Energy - Green segment recorded strong order inflows of ₹330 billion (up 58% Y-on-Y) but its revenue declined 11% due to supply chain issues. Energy - Conventional order inflows significantly dropped to ₹31 billion from ₹314 billion last year. The Realty segment showed strong growth with pre-sales of ₹13 billion (up 32% Y-on-Y) and revenue more than doubling to ₹10.1 billion.
Working Capital Efficiency and Cash Flow
The company demonstrated improved working capital efficiency, with the Net Working Capital to Sales ratio significantly improving to 4.9% in June 2026 from 10.1% in June 2025. Gross Working Capital to Sales ratio also improved to 51.1% from 53.9% in March 2026. Cash Flow from Operations (excluding Financial Services) remained healthy at ₹43 billion during the quarter, supported by strong group-level collections of ₹658 billion.
Strategic Divestments and Partnerships
L&T completed the divestment of Nabha Power on June 25, 2026, resulting in a marginal gain but a tax outflow of ₹110 crores. The divestment of L&T Metro Rail Hyderabad Limited is expected to complete by September 30, 2026, with a ₹0.38 billion loss recorded for April. The company also entered strategic collaborations for advanced unmanned mine counter-measure suites for the Indian Navy, data center security with Fortanix, and EV traction motors with EVR Motors, aligning with its strategic focus.
Outlook and Guidance Maintained
Despite Q1's subdued revenue growth, L&T maintained its FY27 guidance for order inflow growth at 10-12% and revenue growth at 10-12%. The PPM EBITDA margin target remains around 7.8%, and working capital guidance is around 10%. The management expressed confidence in the robust prospects pipeline of ₹15 trillion and expects project awards to pick up from Q2, with no project cancellations observed across opportunities.