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L&T Q4FY26: Strong set, Middle east tensions an opportunity in adversity

ICICIdirect Research 15 May 2026 DISCLAIMER

Larsen and Toubro (CMP: ₹4020, MCap: ₹5.51 Trn; Target: ₹4955, Upside: 21%)

Consolidated Q4FY26 Performance :

L&T secured order inflows (OI) of ₹ 89,772 crore in Q4FY26 largely stable YOY, (with international orders contributing 67%), while for FY26 order inflow rising 22% YoY to ₹4,35,590 crore, driving the order book to a record ₹7,40,327 crore (+28% YoY), with a healthy international mix of 52% led by infra and energy business which formed 57% and 35% of OI. addressable prospects pipeline remained healthy at ~ ₹17.8 trillion for FY27.

L&T consolidated Revenue grew 12% YoY to ₹2,85,874 crore in FY26, while Q4 revenue stood at ₹82,762 crore (+11% YoY). FY26 EBITDA grew 10% YoY to ₹29,151 crore with margin at 10.2% (10.3% in FY25),while Q4 EBITDA grew 5% YoY to ₹8,610 crore with margins at 10.4% ( vs 11% in Q4FY25). Recurring PAT for FY26 increased 18% YoY to ₹17,238 crore, though Q4 recurring PAT growth remained modest at 5% YoY to ₹5,289 crore. The company declared a dividend of ₹38/share, reflecting continued cash flow strength.

Segmental performance :

Infrastructure segment delivered steady execution with FY26 revenue growing 3% YoY to ₹1,33,910 crore and Q4 revenue at ₹39,694 crore (+2% YoY). Order inflow remained healthy at ₹1,99,064 crore (+15% YoY) with international orders 59% of the total OI in FY26 aided by receipt of major orders in the Renewables, Power Transmission & Distribution and Heavy Civil Infrastructure businesses. In Q4 inflow up 26% YoY. The order book stands strong at ₹4,22,562 crore as on March 2026, with 48% international exposure. EBITDA margins improved to 6.9% (+50 bps YoY), supported by better cost management despite muted growth due to delays in domestic water-related projects.

Energy segment witnessed robust growth, with FY26 revenue rising 35% YoY to ₹54,865 crore and Q4 revenue up 36% YoY to ₹16,594 crore, driven by strong Hydrocarbon and CarbonLite order execution. Order inflow surged 56% YoY to ₹1,36,921 crore, although Q4 inflow declined 34% YoY due to a high base. The order book remains strong at ₹2,58,472 crore with a high international share of 67%. However, EBITDA margins declined to 6.8% (down 170 bps YoY) due to cost pressures in legacy hydrocarbon projects.

Hi-Tech Manufacturing segment reported strong execution-led growth, with FY26 revenue increasing 46% YoY to ₹14,109 crore and Q4 revenue up 45% YoY to ₹4,861 crore. However, order inflow declined sharply by 54% YoY to ₹8,366 crore due to a high base and deferment of orders, with Q4 inflow also down 24% YoY. The order book stands at ₹35,312 crore. EBITDA margins moderated slightly to 16.7% (-60 bps YoY), reflecting execution mix.

Middle east Commentary : L&T highlighted that while the West Asia conflict caused approximately ₹50 billion in revenue slippages in Q4 due to supply chain and logistics disruptions, the region remains a core strategic market with a ₹3 trillion order book, no project cancellations till date,  and company is negotiating with clients to compensate for materially higher insurance and shipping costs. L& T’s consolidated order book stands at ₹7.4 lakh crore, with the Middle East alone accounting for roughly~ 38-40% of that total.The company expects a relatively softer H1FY27, impacted by supply chain constraints and geopolitical disruptions, particularly in international markets, followed by a strong recovery in H2FY27 driven by improved execution and project clearances.

Guidance: For FY27, management has guided for order inflow growth of ~10–12% and revenue growth of ~10–12%, indicating steady growth momentum despite near-term challenges.

Lakshya’31 Strategy: Under its next 5-year strategic roadmap, Lakshya’31, L&T targets order inflow CAGR of ~10–12%, revenue CAGR of ~12–15% and ROE of ~16 17%,  ( vs earlier medium-term target of 18%)  led by sustained growth in its core EPC businesses. The strategy is anchored around scaling Infrastructure and Energy segments, while simultaneously investing in future growth engines such as green hydrogen, data centres, semiconductor design and industrial electronics. The company aims to maintain a disciplined and calibrated capital allocation framework, with continued focus on asset-light growth, technology adoption and improving return ratios.

We expect revenues and PAT to grow at CAGR of 15.4% and 15.2% over FY26-FY28E. and assign BUY rating to L&T valued at SOTP-based target price of ₹4955 and consider as the best capex play in large-cap capital goods space.

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