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🌐.