L&T reports 33% profit growth in Q2, order inflows rise 28% to ₹1.48 trillion

Strong order inflows drive growth

Larsen & Toubro (L&T) reported a 28% increase in order inflows to ₹1.48 trillion ($15.56 billion) for the quarter ended September 2026, according to Mint. The surge was largely driven by international orders, which accounted for 63% of the total inflow. Over a third of new orders originated from India, reflecting steady demand in the domestic market despite execution challenges in the water segment due to financial constraints faced by Indian states.

The company’s consolidated orderbook reached a record ₹8.5 trillion, nearly two-thirds of which stems from overseas markets. This diversity, spanning infrastructure, utilities, defence, and technology services, has helped L&T mitigate risks from geopolitical disruptions, including those in West Asia.

Revenue and profit rise despite margin pressures

Consolidated revenue grew 16% year-on-year to ₹78,750 crore, with international revenue contributing 58% of the total. Profit for the quarter rose 33% to ₹4,878 crore, up from ₹3,926 crore in the same period last year. However, the EBITDA margin narrowed by 1.3 percentage points to 8.7%, primarily due to cost escalations and execution delays in West Asia, where material shipment delays have extended project timelines.

Subramanian Sarma, Deputy Managing Director & President of L&T, noted that while some cost escalations would be contractually passed through to clients, the impact would be felt with a lag. Analysts expect margins to improve from Q3 FY27 as higher-priced orders replace legacy contracts affected by input-cost inflation.

Geopolitical resilience and future outlook

Despite geopolitical tensions in West Asia, L&T reported no significant impact on project execution. Employees at project sites in the region remained safe, and work continued uninterrupted. Amit Anwani, Vice-President and Lead Analyst at PL Capital, described the quarter as "broadly stable to good," highlighting L&T’s ability to absorb external disruptions due to its diversified orderbook.

L&T is targeting a pipeline of ₹10 trillion in projects for future bids and aims to triple its defence technology revenue over the next five years. The company is also expanding its geographical focus, with Europe and Central Asia emerging as its third key market after India and the Middle East. Recent wins include a ₹50,000 crore offshore wind energy project in the Netherlands and Germany, as well as projects in Tashkent, including a new international airport and a data centre.

Financial health and risk management

L&T reported a multi-decadal low working capital ratio of 1.7% and an improved return on equity ratio of 15.7%. The company has adopted a more conservative risk appetite, avoiding projects with high volatility, which has narrowed its margins to 7-8% from the historical 10-12%. Analysts at ICICI Direct forecast a compounded annual growth rate of 13.8-15.5% for L&T between FY26 and FY28.

R. Shankar Raman, President & Whole-Time Director of Finance at L&T, emphasized the company’s stability, stating, "Unless we do something dramatically well or dramatically stupid, I don’t think there will be a huge volatility in our outcomes."

What this means

Lazyfounder analysis — our interpretation, not reported fact.

L&T’s Q2 results demonstrate how a diversified orderbook and strong international presence can insulate a company from regional volatility. For founders and operators in infrastructure, defence, and capital goods, the story highlights three critical lessons: 1) Geographic diversification can offset execution risks in any single market, 2) A large, diversified orderbook acts as a financial shock absorber, and 3) Margin pressures from cost escalations can be managed through contractual pass-throughs, though with a lag. However, L&T’s narrowed margins—driven by a lower risk appetite—also signal that growth may come at the expense of profitability in the near term.

Key takeaways

• Founders in capital goods and infrastructure should note L&T’s ability to sustain growth despite geopolitical and execution challenges, underscoring the value of a diversified orderbook.
• The 8.7% EBITDA margin, while lower than historical levels, reflects the trade-off between risk and profitability; operators may need to assess whether their own risk thresholds align with long-term growth objectives.
• L&T’s push into defence technology and Europe/Central Asia signals emerging opportunities in these sectors, particularly for companies with existing international exposure.
• The working capital ratio of 1.7% and improved return on equity highlight operational efficiency, a benchmark for peers aiming to optimize cash flow and shareholder returns.

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