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Industry bellwether Larsen & Toubro (L&T) didn’t go unscathed from geopolitical tensions despite strong order inflows and a robust backlog. The management estimates the company lost almost ₹5,000 crore of revenue in the March quarter (Q4FY26). This, along with higher input costs, meant the expected improvement in operating margins did not materialize.
L&T’s core project & manufacturing (P&M) Ebitda margin of 8.3% in FY26 missed the target of 8.5%. P&M FY26 revenue growth of 12% missed the 15% guidance, hurt by delays in domestic water projects and slower international progress amid the West Asia war.
Order inflow was L&T’s strong suit, growing 22% in FY26 versus the 10% target, aided by ultra-mega contracts across sectors and geographies. The order book stood at an all-time high of ₹7.4 trillion in March, up 28%, aiding revenue visibility.
About 92% of the total order book was from the infrastructure and energy segments. The share of international orders was at a peak at 52%.
However, geopolitical tensions could mar L&T's execution capability and hinder the order intake trajectory. L&T is cautious about the FY27 outlook, at least the first half. West Asia forms about 78% of its international order book of ₹3.28 trillion.
The management said all projects in the region stay operational with no cancellations and with payments on track. However, execution is expected to remain soft in H1FY27 due to supply chain constraints and delays in domestic projects, with recovery likely in H2FY27.
Given the West Asia overhang, the guidance for FY27 has been toned down. Revenue growth and order inflows are likely to improve 10-12% in FY27 with a P&M margin of 7.8%.
The order prospects pipeline for FY27 is 6% lower at ₹17.8 trillion. Of the total order prospects pipeline, ₹9.1 trillion is from the domestic market and ₹8.7 trillion is from overseas. The latter is down 27%, which is understandable in the current backdrop.
Consequently, brokerages have trimmed earnings estimates. Analysts at Emkay Global Financial Services cut L&T’s earnings per share estimates by 9% in FY27 and 8% in FY28. L&T’s shares fell over 3% on Wednesday.
Having surpassed its Lakshya 2026 revenue and order inflow CAGR targets, L&T unveiled the Lakshya 2031 strategic roadmap, eyeing 10-12% CAGR in order inflows, revenue growth of 12-15% over FY26-31 and return on equity (RoE) of 16-17%. These targets are lower than the 14% order inflow growth, 15% revenue growth and 18% RoE for FY21-FY26.
Of the ₹43,000 crore investment for the Lakshya 2031 plan, about ₹33,000 crore has been allocated to new growth engines, green hydrogen, data centres, industrial electronics and semiconductors. However, this plan may be dilutive for return ratios in the near term.
While the Lakshya 2031 guidance implies steady growth, the RoE guidance versus 16.6% achieved in FY26 is underwhelming, said PL Capital.
Meanwhile, the divestment of non-core assets Nabha Power and Hyderabad Metro is expected to conclude by Q1FY27. This would improve L&T’s focus on core businesses and result in better capital allocation in the mid-term.
The L&T stock is down 5% so far in 2026 versus a 7% drop in the Nifty 50 index. The decline is contained by order inflow trends. However, stabilization of the situation in West Asia is a near-term upside stock trigger.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.
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