L&T Q1 profit rises 14 per cent as record Rs 7.79 trillion order book powers growth

Mumbai: If order books were building blocks, Larsen & Toubro has just laid another solid foundation. India’s engineering and infrastructure giant reported a 14 per cent year on year rise in profit for the first quarter of FY27, supported by record order wins and stronger treasury income, even as operating margins came under pressure from slower project execution and higher provisions.

The company posted a reported profit after tax of Rs 41.2 billion for the quarter ended June 30, 2026, compared with Rs 36.2 billion in the corresponding period last year. Revenue increased 7 per cent to Rs 679.4 billion from Rs 636.8 billion, led by healthy execution across its conventional energy and technology businesses.

International operations continued to contribute more than half of the group’s business, accounting for 51 per cent of total revenue at Rs 346.5 billion, marginally lower than 52 per cent a year ago.

Despite the higher revenue, operating profitability weakened. EBITDA declined 3 per cent to Rs 61.2 billion from Rs 63.2 billion, while EBITDA margin narrowed to 9.0 per cent from 9.9 per cent. The decline reflected slower execution in large infrastructure projects, foreign exchange movements affecting its IT subsidiaries and higher expected credit loss provisions.

While core operations softened, non-operating income gave earnings a significant boost.

Other income surged 75 per cent to Rs 23.8 billion, driven by better returns on the group’s sizeable cash reserves and stronger treasury yields. Finance costs dropped 31 per cent to Rs 5.4 billion as average borrowings reduced and interest expenses relating to Hyderabad Metro were excluded from May 1, 2026, following restructuring. The company’s tax expense rose 26 per cent to Rs 19.4 billion due to taxes linked to strategic divestments.

The biggest highlight of the quarter was L&T’s expanding order book.

Order inflows rose 14 per cent year on year to Rs 1,080 billion, with international projects contributing Rs 607 billion, or 56 per cent, while domestic orders stood at Rs 473 billion.

India accounted for 44 per cent of new orders, followed by the US and Europe at 42 per cent, the Middle East at 11 per cent and the rest of the world at 3 per cent.

Infrastructure and utilities remained the largest contributor to fresh business with 41 per cent of new orders, followed by green energy at 31 per cent, services at 20 per cent, manufacturing and products at 5 per cent and conventional energy at 3 per cent.

These wins lifted the company’s consolidated order book to an all-time high of Rs 7,790 billion as of June 30, 2026, representing a 27 per cent increase over the previous year. International projects account for 52 per cent of the backlog, while domestic projects make up the remaining 48 per cent.

L&T also said its addressable near-term opportunities pipeline stands at around Rs 15 trillion, giving the company strong visibility for future growth.

Performance across businesses presented a mixed picture.

The infrastructure and utilities division, the group’s largest business, reported a 3 per cent decline in revenue to Rs 218.6 billion as older projects entered slower execution phases. Margins narrowed to 5.1 per cent from 5.5 per cent because of revenue mix changes and higher credit provisions.

Conventional energy delivered one of the strongest performances, with revenue rising 14 per cent to Rs 142.4 billion, supported by execution of CarbonLite Solutions projects. Margins remained stable at 7.6 per cent.

Green energy revenue fell 11 per cent to Rs 56.1 billion due to supply chain bottlenecks affecting solar projects. However, the business secured major offshore wind contracts in Europe that strengthened its future order pipeline.

Manufacturing and products grew revenue by 9 per cent to Rs 44.9 billion, although margins declined sharply to 15.2 per cent because of an unfavourable product mix. The company reiterated that its Precision Engineering business does not manufacture explosives, cluster munitions, landmines or nuclear weapon delivery systems.

Technology, platforms and services continued to deliver robust growth. Revenue increased 15 per cent to Rs 146.3 billion, led by strong performances from LTIMindtree and L&T Technology Services, although wage revisions and currency movements reduced margins slightly to 19.2 per cent.

Meanwhile, L&T Finance posted a strong quarter, with income from operations rising 27 per cent to Rs 50.4 billion. Profit after tax climbed 29 per cent to Rs 9 billion, while its retail loan book expanded to account for 98 per cent of total lending.

The realty business more than doubled revenue to Rs 10.1 billion, driven by project handovers in the Mumbai Metropolitan Region. Margins eased because of changes in the revenue mix from joint development agreements, while the company also expanded into the National Capital Region through a 20-acre land acquisition in Gurugram.

L&T also strengthened its financial position during the quarter.

Net working capital as a percentage of revenue nearly halved to 4.9 per cent from 10.1 per cent a year earlier, reflecting improved cash management. Group cash, cash equivalents and current investments increased to Rs 851 billion, while operating cash flow, excluding financial services, stood at Rs 43 billion.

The company completed the sale of Nabha Power during the quarter and signed an agreement to divest its stake in LTMRHL to Hyderabad Metro Rail Ltd.

On the growth front, LTIMindtree made an offer to acquire the technology and consulting services business of Randstad. L&T also expanded its strategic partnerships with EVR Motors for electric vehicle motors, Fortanix for AI cloud security solutions and Exail for unmanned mine countermeasure systems.

In another milestone, Moody’s Ratings assigned L&T a Baa1 long-term credit rating with a stable outlook, placing it two notches above India’s sovereign rating.

During the quarter, Narendra Modi visited the company’s AM Naik Heavy Engineering Complex in Hazira, where he reviewed facilities involved in precision engineering, electrolyser manufacturing and heavy nuclear equipment.

With a record Rs 7.79 trillion order book, improving cash generation and a healthier balance sheet, L&T enters the rest of FY27 with considerable momentum. While execution challenges and margin pressures remain, the engineering giant appears well positioned to convert its expanding pipeline into long-term growth.