Larsen & Toubro
Executor of the capex cycle at a cyclical multiple
- Last close
- ₹3,749.10
- 29 Sept 2026 · reference
- 1D · 1M
- −0.5% · −7.3%
- price-only
- Weight
- 2.4%
- 31 Jul 2026 · Aug rank 16
- Thesis review
- 8 Sep 2026
- Why We Own, p52
Approved description
India's largest engineering, procurement and construction (EPC) conglomerate, executing infrastructure, hydrocarbon, power, renewable/green energy, defence and heavy engineering projects, alongside listed IT/technology subsidiaries (LTIMindtree, L&T Technology Services) and L&T Finance. Order book of Rs 7.78 trillion at Jun-2026 is the largest of any Indian contractor; 52% of the order book and 51% of revenue are now international, dominated by Middle East hydrocarbon and renewables work.
- 01Record order book of Rs 7.78 trn at Jun-2026 (+27% YoY, ~2.7x FY26 revenue) gives multi-year revenue visibility; Q1FY27 inflows of Rs 1.08 trn (+14%) and a Rs 15 trn prospect pipeline for the remaining nine months of FY27 support the 10-12% inflow-growth guidance.
- 02Balance-sheet discipline: net working capital fell to 4.9% of revenue in Q1FY27 (from 10.1%), cash and investments of Rs 85,100 cr, and non-core exits (Nabha Power, Hyderabad Metro for Rs 1,461 cr with debt refinanced by the buyer) free capital and guarantees.
- 03Consolidated ROE of 16.1% (Q1FY27 slides) with FY26 net profit up 7% to Rs 18,954 cr; dividend payout of 33% and a 3-year ROE of 16% versus 14% five-year average show an improving return profile.
- 04Direct play on India's FY27 central capex of Rs 12.2 lakh crore (up from Rs 10.97 lakh crore FY26 RE) and Middle East energy/renewables spending (42% of Q1 inflows), giving a diversified order pipeline that pure-domestic peers lack.
- 05Valuation of ~31x TTM / 28x FY28e (Buoyant) is below the 60-100x multiples of Siemens, ABB and BHEL for a company with a comparable ROE, and the 'Lakshya 31' pivot to data centres, semiconductors and green hydrogen adds optionality.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Net Sales | 67,942 | +6.7% | −17.9% |
| Operating Profit | 8,149 | +1.6% | −21.8% |
| Net Profit | 4,123 | +14.0% | −22.6% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
General industrial/consumer/IT preset: growth, margins, ROCE/ROIC, working capital, FCF, net debt; P/E, EV/EBITDA.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Completion of the Rs 1,461 cr Hyderabad Metro stake sale to Hyderabad Metro Rail Ltd (deadline extended to 30-Sep-2026) and release of associated guarantees.
- H2FY27 order-inflow and margin recovery that management guided for (H1 soft, H2 stronger) - Q2FY27 results in late Oct/early Nov 2026.
- Conversion of the Rs 15 trn prospect pipeline, especially large Middle East hydrocarbon and offshore-wind awards, and any further non-core divestments.
- Geopolitical/execution risk in the Middle East (37% of order book): West Asia disruptions already cut green-energy revenue 11% YoY in Q1FY27 and cost ~Rs 5,000 cr of Q4FY26 revenue.
- Margin compression: EBITDA margin fell to 9.0% in Q1FY27 from 9.9%, FY26 core margin (8.3%) and revenue growth (12%) both missed guidance, and FY26 order inflows fell 3% YoY.
- Capital-intensive diversification under Lakshya 31 (Rs 15,000 cr green hydrogen, Rs 10,000 cr data centres, Rs 3,000 cr semiconductors) could dilute ROE if returns lag the core EPC business.