L&T kicks off FY26 with big orders; all eyes now on margin trajectory

Mumbai, July 30, 2025 — Engineering and construction conglomerate Larsen & Toubro (L&T) has begun FY26 on a strong note, bagging a series of large orders across its infrastructure, hydrocarbon, and power transmission segments. As the company rides this wave of order inflows, analysts and investors alike are turning their attention to a more critical metric—margin trajectory, which will determine how profitable this growth truly is.

Strong Order Book Signals Healthy Demand

In the first quarter of FY26, L&T announced that it has secured fresh orders worth over ₹45,000 crore, with significant contracts coming from the Middle East, Africa, and Southeast Asia, in addition to key domestic wins in transportation and green energy.

Some of the major projects include:

• An EPC contract in Saudi Arabia for a major oil and gas processing facility.

• A high-speed rail corridor project in Gujarat.

• Power transmission infrastructure projects in Odisha and Kenya.

• Data center construction orders in South India.

These wins have further bolstered L&T’s order backlog, which now stands at a record ₹5.3 lakh crore, offering robust revenue visibility for the next 2–3 years.

“The size and diversity of orders won in Q1 underscore L&T’s ability to compete at a global level,” said Vinit Bolinjkar, Head of Research at Ventura Securities. “However, the profitability of these projects will depend heavily on input cost inflation and execution efficiency.”

Margin Pressures a Growing Concern

While top-line growth appears promising, L&T’s operating margins remain under scrutiny. In FY25, the company reported an EBITDA margin of 10.6%, slightly below its earlier guidance of 11%. Rising commodity prices, labor costs, and logistical bottlenecks have taken a toll on project profitability.

L&T’s management has acknowledged these challenges but remains confident in its margin outlook.

“We are consciously prioritizing quality orders over sheer volume,” said R. Shankar Raman, Group CFO, during the company’s Q1 FY26 earnings call. “We expect margin expansion in the coming quarters as project execution stabilizes and commodity prices normalize.”

Analysts are cautiously optimistic. A report from Motilal Oswal noted that while margins may remain under pressure in the short term, the company’s operational discipline and technological edge will help it protect profitability in the long run.

Strategic Focus Areas for FY26

To counteract margin volatility and drive future growth, L&T has outlined several strategic priorities for FY26:

• Digitalization of project management to boost efficiency and transparency.

• Increased investment in modular construction and pre-fabrication technologies.

• Expansion in the green energy and water management segments, which offer better pricing power.

• Divestment of non-core assets to enhance capital allocation.

These efforts are expected to improve return ratios and support the company’s long-term vision of becoming a net-zero enterprise by 2040.

Stock Market Reaction & Investor Sentiment

Shares of L&T have gained nearly 12% year-to-date, outperforming the Nifty 50, which is up 6.5% during the same period. The stock closed at ₹3,380 on Tuesday, reflecting positive investor sentiment around the company’s order inflow momentum.

Brokerages remain bullish. Jefferies India has maintained a “Buy” rating with a revised target of ₹3,700, citing L&T’s leadership in domestic infra and strong overseas traction. Meanwhile, Kotak Institutional Equities emphasized that sustained execution and margin expansion will be the key triggers for the next leg of rally.

“With India’s infrastructure capex cycle picking up and global diversification yielding results, L&T is in a sweet spot,” said Ruchi Maheshwari, infrastructure analyst at Kotak. “However, a close watch on margins is essential to validate the long-term story.”

Outlook: Can L&T Balance Growth and Profitability?

As India gears up for a major infrastructure overhaul and global markets look to diversify suppliers beyond China, L&T is well-positioned to benefit from these tailwinds. But with rising competition, geopolitical uncertainties, and inflationary risks still in play, the margin trajectory will be the most closely tracked KPI for FY26.

For now, investors appear encouraged by the company’s robust order inflows and strategic vision, but sustained performance—both operationally and financially—will determine whether L&T can maintain its leadership in the infrastructure ecosystem.