Larsen & Toubro Limited — Q3 FY26 earnings call

Call held 28 Jan 2026

Management summary

Larsen & Toubro delivered a robust Q3 FY26, achieving its highest ever quarterly order inflows of Rs 1,356 billion, a 17% YoY increase. Group revenues grew 10% to Rs 714 billion, driven by strong execution across most businesses. While reported PAT saw a 4% decline due to a one-time Labour Codes provision, recurring PAT surged 31% YoY to Rs 44 billion, reflecting improved operational efficiencies and treasury management. The company remains confident in achieving its full-year revenue and margin targets, supported by a strong order book and a healthy prospects pipeline.

Highlights

  • Highest ever quarterly order inflows at Rs 1,356 billion, up 17% YoY.

  • Group Revenues grew 10% YoY to Rs 714 billion.

  • Projects & Manufacturing portfolio margin improved by 50 basis points YoY to 8.1%.

  • Net Working Capital to Revenue ratio improved to 8.2% as of December 2025, a 450 basis points improvement YoY.

  • Recurring PAT at Rs 44 billion, reported a strong growth of 31% YoY.

  • Reported PAT at Rs 32 billion, down 4% YoY, due to a one-time impact of Rs 11.9 billion from new Labour Codes regulation.

  • Order book stood at Rs 7.33 trillion as of December 2025, up 30% YoY.

  • Full year FY26 revenue growth guidance of 15% retained.

What they filed

Q1 FY27: revenue up 7.6%, net profit up 27.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue34,919 34,984 42,329 33,471 35,116 +1%37,903 +8%47,191 +11%36,024 +8%
EBITDA2,952 2,883 3,758 2,391 2,320 −21%3,164 +10%4,691 +25%1,915 −20%
Net profit1,988 2,404 3,509 3,485 -3,591 −281%2,832 +18%3,561 +1%4,455 +28%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Order Inflows

  • Full year order inflow growth Order Inflows · FY '26 · High confidence exceeding the 10%

    Previously 10% → exceeding the 10%

    Basis the 9-month performance and the healthy prospects pipeline for the near term, we will be exceeding the 10% order inflow guidance for FY '26.

    — P. Ramakrishnan

Revenue

  • Full year revenue growth Revenue · FY '26 · High confidence 15%
    We expect the customary ramp-up in project execution during Q4 and are reasonably confident of achieving our full year revenue growth guidance of 15%.

    — P. Ramakrishnan

Margins

  • Projects & Manufacturing EBITDA margin Margins · full year FY '26 · High confidence 8.5%
    Our Projects & Manufacturing EBITDA at 7.9% for 9 months of the current year is in line with the target that we have set ourselves at 8.5% for the full year FY '26.

    — P. Ramakrishnan

Working Capital

  • Net Working Capital to Revenue ratio Working Capital · by March '26 · High confidence around 10%

    Previously 12% → around 10%

    Lastly, on Working Capital - We had earlier guided the Net Working Capital to Revenue of 12% by March '26. However, with stronger collection intensity and improved contractual terms, our Net Working Capital to Revenue has improved sharply to 8.2% as of December '25, and we expect to close the year with a revised target of around 10%.

    — P. Ramakrishnan

Thermal Power

  • Country's additional GW capacity Thermal Power · next 2 years or so · Medium confidence about 15 to 20 GW
    And going forward, we believe that overall, I think the country will still add about 15 to 20 GW in the next 2 years or so.

    — Subramanian Sarma

  • L&T's GW opportunities Thermal Power · coming years · Medium confidence 4 - 5 GW
    We still see 4 - 5 GW opportunities for us, as a minimum in the coming years.

    — Subramanian Sarma

Data Center

  • Total capex investment Data Center · null · High confidence roughly in the range of Rs 1,000-odd crores
    The total capex investment in the data center is roughly in the range of Rs 1,000-odd crores.

    — P. Ramakrishnan

Electrolyzer

  • Stack upgrade Electrolyzer · near term · High confidence 8 - 10 MW stack

    Previously 4 MW stack → 8 - 10 MW stack

    We have already made a perfect design of a 100% indigenous 4 MW stack. We are now slowly upgrading it to 8 - 10 MW stack.

    — P. Ramakrishnan

Hydrocarbon Business

  • Margin recovery Hydrocarbon Business · next 2-3 quarters · Medium confidence 2 or 3 quarters from now
    I expect Hydrocarbon business to come back on full strength maybe 2 or 3 quarters from now.

    — Subramanian Sarma

  • Stressed projects completion Hydrocarbon Business · after some quarters · High confidence near term
    as Mr. Sarma also reiterated that we expect some of these, I would say, stressed projects to get closed in the near term and margin should move northward hopefully after some quarters.

    — P. Ramakrishnan

Water Business

  • Resolution of payment issues Water Business · within a quarter · Medium confidence within a quarter
    We do not think that Water thing will last that long. I mean this should get resolved... And maybe within a quarter, that should get unlocked and things should start moving.

    — Subramanian Sarma

3 min read

Detailed narrative

Larsen & Toubro delivered a strong performance in Q3 FY26, marked by record order inflows and steady revenue growth. The company reported its highest ever quarterly order inflows of Rs 1,356 billion, representing a significant 17% year-on-year increase, driven by robust ordering momentum in both domestic and international markets. The Projects & Manufacturing segment contributed Rs 1,164 billion to these inflows, growing 18% YoY. Group revenues for the quarter stood at Rs 714 billion, a 10% increase over the previous year, with international revenues accounting for 54% of the total.

Profitability metrics showed mixed results, primarily due to a one-time impact. While the reported PAT for Q3 FY26 was Rs 32 billion, a 4% decline YoY, this was attributed to a Rs 11.9 billion provision arising from new Labour Codes regulations. Excluding this one-time impact, recurring PAT demonstrated strong growth of 31% YoY, reaching Rs 44 billion, reflecting improved activity levels, operational efficiencies, and efficient treasury management. The Projects & Manufacturing portfolio margin improved by 50 basis points YoY to 8.1%, and the group-level EBITDA margin (excluding other income) expanded to 10.4% from 9.7% in the prior year. The Net Working Capital to Revenue ratio also saw a significant improvement, reducing by 450 basis points YoY to 8.2% as of December 2025.

Segment-wise, the Infrastructure segment's order inflow grew 26% YoY, with its order book at Rs 4.24 trillion. However, its revenue growth was a modest 5% YoY, primarily due to a slowdown in the domestic Water & Effluent Treatment projects, which faced funding headwinds. The Energy Projects segment recorded robust order inflows of Rs 460 billion, but its margin declined to 5.9% from 8.3% in the previous year, attributed to cost overruns in a few legacy Hydrocarbon projects nearing completion. The Hi-Tech Manufacturing segment saw a 34% revenue growth, while the IT and Technology Services segment reported a 12% revenue increase, benefiting from operational efficiencies and forex tailwinds. L&T Realty achieved its highest ever presales of approximately Rs 50 billion, including over Rs 40 billion from its Green Reserve Noida project.

Management expressed high confidence in achieving its full-year FY26 targets. The company revised its order inflow guidance upward, now expecting to exceed the initial 10% growth target, driven by strong nine-month performance and a healthy prospects pipeline. The full-year revenue growth guidance of 15% was retained, with management anticipating a customary ramp-up in project execution during Q4. The Projects & Manufacturing EBITDA margin target of 8.5% for the full year was also reaffirmed. Furthermore, the Net Working Capital to Revenue ratio target was revised downward to around 10% by March '26, reflecting improved collection intensity and contractual terms.

During the Q&A, management addressed concerns regarding canceled Kuwait orders, clarifying they were not part of the order book and are expected to re-emerge as tenders this calendar year. They also acknowledged margin pressure in the Hydrocarbon business due to legacy projects but anticipate a recovery in 2-3 quarters as these projects conclude. The slowdown in the domestic Water segment was attributed to funding issues, with management actively engaging with the government for resolution and exploring international opportunities. Strategic investments in new ventures like Data Centers (Rs 1,000 crores capex, 32 MW capacity by fiscal year-end) and Electrolyzers (upgrading stack design to 8-10 MW) were highlighted as future growth drivers. The company emphasized its proactive hedging strategies for commodity and currency risks, assuring minimal impact on margins from market volatility.

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