Analysis: Larsen & Toubro Limited

Growth thesis

Larsen & Toubro is a diversified EPC, manufacturing, and technology conglomerate executing infrastructure, energy, hi-tech manufacturing, and financial services projects. The business is anchored by a Rs 7.40 trillion order book and a Rs 17.8 trillion FY27 prospects pipeline, positioning the company for 10-12% revenue growth. Over the next 12-24 months, the specific trajectory change hinges on the Energy segment recovering from legacy hydrocarbon cost overruns as those projects close, stabilizing overall Projects and Manufacturing margins at 7.8%. Simultaneously, working capital efficiency has structurally improved to 4.1%, driving stronger operating cash flows. While heavy capital outlays into nascent ventures like green hydrogen and data centers will temporarily suppress ROE toward 16-17%, the core thesis rests on legacy margin drags rolling off and Middle East supply chains normalizing to unlock operating leverage.

Why is Larsen & Toubro Limited stock rising?

• Lakshya 31 strategic plan targets scaling existing businesses and building future growth engines in Data Centers, Green Hydrogen, Semiconductors, and Industrial Electronics
• Capital outlay of Rs 150 billion planned for Green Hydrogen, Rs 100 billion for Data Centers, Rs 50 billion for Industrial Electronics, and Rs 30 billion for Semiconductor business over the plan period
• Realty business to be scaled through disciplined land acquisitions, joint developments, and integrated township development, with a focus on listing readiness
• Development Projects segment reoriented towards green assets, including operating green hydrogen and green ammonia production facilities under a BOO framework, supported by firm long-term take-or-pay arrangements
• Prospects pipeline for FY27 stands at Rs 17.8 trillion, with Infrastructure & Utilities at Rs 9.4 trillion, Energy Conventional at Rs 5.4 trillion, Energy Green at Rs 2.5 trillion, and Manufacturing & Products at Rs 495 billion

Research report

companyname: Larsen & Toubro Limited ticker: LT sector: Engineering & Construction / Conglomerate (EPC, Hi-Tech Manufacturing, IT Services, Financial Services) Larsen & Toubro is an Indian multinational conglomerate built around engineering, procurement and construction (EPC). In FY26 it recorded Group revenue of Rs 2,85,874 crore (11.8% growth), order inflows of Rs 4,35,590 crore (22.1% growth) and an order book of Rs 7,40,327 crore (27.8% growth). The Group operates 90 subsidiaries, 5 associa...

Catalysts

capex, margin expansion, new product segment, geographic expansion

Growth guidance

FY27 revenue growth guided at 10-12% driven by order prospects pipeline of Rs 17.8 trillion and improved execution in H2FY27

Management consistency

consistent