Company Overview

Larsen & Toubro — India's Engineering & Construction Conglomerate

Larsen & Toubro Limited (NSE: LT) is India's largest engineering, procurement and construction (EPC) and diversified industrials group — a USD ~32 billion enterprise operating in over 50 countries across eight decades. Founded in 1938 by Danish engineers Henning Holck-Larsen and Soren Kristian Toubro, L&T has grown into a multi-dimensional conglomerate with leadership positions in infrastructure, energy, defence, IT services, financial services, and new technology bets.

The group operates with no identifiable promoter, making institutional investors (FII + DII = ~62%) the primary oversight force. With a consolidated FY26 revenue of ₹2,85,874 crore and an order book of ₹7,40,327 crore (2.6× book-to-bill), L&T sits at the epicentre of India's multi-decade infrastructure supercycle.

₹7,40,327 Cr

Order Book (Mar-26)

₹2,85,874 Cr

Revenue FY26

2.6×

Book-to-Bill

54%

International Revenue

50+

Countries Presence

₹5,57,074 Cr

Market Cap

Business Segments (FY26)

L&T reports under seven operating segments, spanning EPC, technology services, financial services, and new-economy bets:

Segment	FY26 Revenue (₹ Cr)	Revenue Share	Description
Infrastructure	~₹1,31,000	~46%	Buildings, factories, transport, water, power T&D, smart cities
Energy	~₹55,000	~19%	Hydrocarbon EPC + Green/clean energy (electrolysers, offshore wind)
Hi-Tech Manufacturing	~₹22,000	~8%	Defence, precision engineering, heavy engineering, nuclear
IT & Technology Services	~₹53,947	~19%	LTIMindtree (68.5%), LTTS (73.6%), semiconductor chip-design
Financial Services	~₹17,283	~6%	L&T Finance (66% stake) — diversified retail NBFC
Development Projects	Declining	~1%	Residual from legacy exits (Metro, Nabha, Hydel, IDPL)
Other	~₹6,644	~2%	Realty, valves, industrial products, rubber processing machinery

FY26 Growth highlights: Energy +35%, Hi-Tech Manufacturing +42%, IT & Technology Services +11%. Infrastructure broadly flat on Water/Effluent clearance delays. International revenue rose to 54% of total in FY26 (vs. 50% in FY25).

01

Executive Summary

Investment Thesis

1

Record Order Book — Multi-Year Revenue Visibility

Consolidated order book reached ₹7,40,327 crore at Mar-26 (+27.8% YoY); international orders 52% of book; Infrastructure + Energy ~92% of total. Infrastructure alone carries ~27 months of book-to-bill coverage.

2

Proven Through-Cycle Growth — Lakshya-26 Delivered

Across Lakshya-26 (FY21–FY26), order inflows compounded ~20% and revenue ~16% — both ahead of plan. ROE rose from ~10% to 16.6% (ex-Labour Code). The track record of delivering vs. targets adds credibility to Lakshya-31.

3

Capital Discipline & Cleaner Balance Sheet

Group net debt/equity fell to 0.35× (from 0.60×), interest coverage improved to 9.2×. Legacy Development Projects (Hyderabad Metro, Nabha Power, Hydel, IDPL) have been fully exited — "no residual legacy assets" per management.

4

Lakshya-31 — New Investment Phase (Margin Transition Risk)

PBDIT margin drifted from ~11.6% (FY22) to ~10.2% (FY26) as lower-margin EPC scaled. The Lakshya-31 ROE target of 16–17% deliberately absorbs upfront investment in data centres, green energy, and semiconductors. Margin re-expansion is 2-3 years out.

5

Geopolitics — Near-Term Wildcard

~₹3 trillion of order book and ~78% of international orders sit in the Middle East. The West Asia conflict deferred FY26 awards and inflated logistics/insurance costs, causing revenue to grow +12% vs. the guided +15%. FY27 guidance has been tempered to 10–12%.

6

India Infrastructure Supercycle + GCC Sovereign Capex

India GDP at 6–7% with sustained public capex; private-sector order share jumped from 21% to 39% in one year on semiconductor fabs, data centres, solar EPC, and thermal power. GCC nations' Vision 2030 programmes provide long-duration international revenue.

Catalysts & Risks

Near-Term Catalysts

Middle East ceasefire / de-escalation accelerating deferred awards
India Union Budget FY27 — sustained infrastructure capex allocation
L&T-Exail Navy MCMV partnership — defence order pipeline
Data centre order wins (seed investments turning profitable)
Private-sector order momentum (fabs, solar, thermal, RE storage)
Lakshya-31 targets officially published — re-rating catalyst

Key Risks

Escalation of West Asia conflict delaying/cancelling Middle East awards
India public capex slowdown in election/fiscal consolidation cycle
Margin compression from EPC commodity cost inflation (steel, cement)
Working capital normalisation (NWC guided to ~10% in FY27 from 4.1%)
Labour Code re-measurement one-off (~110 bps ROE impact)
Execution delays in new bets (data centres, green hydrogen, semiconductors)

At-a-Glance Snapshot

Parameter	Value	Parameter	Value
NSE Symbol	LT	Sector	Diversified Industrials / EPC
CMP	₹4,050	Market Cap	₹5,57,074 Cr
52W High	₹4,440	52W Low	₹3,288
P/BV	5.1×	Dividend Yield	0.94%
FY26 EPS	₹116.92	FY26 P/E	34.6×
Avg Daily Value	₹1,425.90 Cr	Float Quality	High (FII + DII = 62%)
FY29E Target (EV/EBITDA)	₹5,278	Upside from CMP	~30%
SOTP Base Target	₹3,536	P/E FY29E Base	₹5,233
DCF Target	₹1,763	Order Book	₹7,40,327 Cr

02

Financial Performance

Consolidated Profit & Loss — FY22–FY29E

Metric (₹ Cr)	FY22	FY23	FY24	FY25	FY26	FY27E	FY28E	FY29E
Revenue	—	1,83,341	2,21,113	2,55,734	2,85,874	3,14,461	3,52,197	3,94,460
Revenue Growth	—	—	+20.6%	+15.7%	+11.8%	+10.0%	+12.0%	+12.0%
EBITDA	—	—	28,745	33,245	34,305	37,735	42,264	47,335
EBITDA Margin	~11.6%	—	~13%	~13%	~12%	12.0%	12.0%	12.0%
EBIT	—	—	30,029	33,504	36,032	39,308	44,025	49,308
EPS (₹)	61.70	74.50	95.00	109.35	116.92	112.08	131.83	149.50
DPS (₹)	22	24	34	34	38	—	—	—
BVPS (₹)	—	—	—	—	—	862.13	941.65	1,031.05
ROE	~11.0%	—	—	~15.5%	16.6%	13.0%	14.0%	14.5%

EPS FY27E dips to ₹112.08 vs FY26 ₹116.92 because: (1) Labour Code one-time provision impact, (2) Middle East execution disruption, and (3) heavy investment phase in data centres, green H2, semiconductors hitting near-term margins. Recovery expected by FY28E–FY29E as investments turn productive.

Segment Revenue Mix (FY26)

Segment	FY25	FY26	YoY Growth	PBIT Margin FY25
Infrastructure	—	~₹1,31,000 Cr	Broadly flat	6.4%
Energy (HC + Green)	—	~₹55,000 Cr	+35% YoY	8.4%
Hi-Tech Manufacturing	—	~₹22,000 Cr	+42% YoY	17.3%
IT & Technology Services	—	₹53,947 Cr	+11% YoY	19.5%
Financial Services	—	₹17,283 Cr	Stable	10.6% (NIM)
Development Projects	—	Declining	Negative	One-off prior-year gain
Others (Realty etc.)	—	~₹6,644 Cr	—	29.2%

Private-sector domestic order share jumped from 21% (Mar-25) to 39% (Mar-26) on thermal power, semiconductor fabs, data centres, and solar EPC. This signals a healthy demand broadening beyond government capex.

Balance Sheet & Cash Flow

Metric	FY24	FY25	FY26	FY27E–29E
Net Debt (₹ Cr)	55,270	58,594	38,252	29,000–35,000
Net D/E	—	0.45×	0.35×	Declining
Interest Coverage	—	~8×	9.2×	Improving
Dividend Payout	~36%	~31%	~33%	~30–35%
DPS (₹)	34	34	38	Growing
Capex (₹ Cr, projected)	—	—	—	₹27,000–30,000

Group net debt distorted by L&T Finance NBFC lending book. Parent EPC gross D/E is just 0.16× — demonstrating true capital discipline in the core business. Declining net debt trajectory projected as operating cash flows scale and legacy investments are exited.

03

Order Book Analysis

Order Book Trajectory

Metric	FY21	FY22	FY23	FY24	FY25	FY26
Order Book (₹ Cr)	—	—	—	—	~5,79,000	7,40,327
YoY Growth	—	—	—	—	—	+27.8%
Order Inflow CAGR (FY21-26)	~20% (Lakshya-26 beat)
Revenue CAGR (FY21-26)	~16% (Lakshya-26 beat)
Book-to-Bill	—	—	—	—	—	2.6×
Infrastructure Coverage	~27 months of revenue

Geographic Mix & Composition

Cut	Domestic	International	Notes
Order Book (Mar-26)	48%	52%	Of ₹3.82 lakh Cr international: 78% Middle East, 22% RoW
Revenue (FY26)	46%	54%	Up from 50% international in FY25, 43% in FY24
Domestic Clients	Private 39%, PSU/SOE 30%, State Govt 22%, Central Govt 9%

Middle East Risk: ~₹3 trillion of order book concentrated in the Middle East. The West Asia conflict has already deferred awards and inflated logistics/insurance costs in FY26. FY27 guidance has been tempered to 10–12% vs. the 15%+ pace prior. Management retains a "healthy cash buffer and low gearing" for flexibility on non-fund-based banking facilities required for large West Asia contracts.

04

Valuation Frameworks

Primary: EV/EBITDA Model

EV/EBITDA is an appropriate method for L&T given its capital-intensive EPC and diversified industrial portfolio. Large depreciation charges, varying leverage across subsidiaries, and multi-year project accounting make EBITDA a better proxy for operating cash generation than PAT. EV/EBITDA also aligns with how global E&C and diversified-industrial peers are valued.

Metric	FY24A	FY25A	FY26A	FY27E	FY28E	FY29E
Revenue (₹ Cr)	2,21,113	2,55,734	2,85,874	3,14,461	3,52,197	3,94,460
Growth	+20.6%	+15.7%	+11.8%	+10.0%	+12.0%	+12.0%
OPM	13%	13%	12%	12%	12%	12%
EBITDA (₹ Cr)	28,745	33,245	34,305	37,735	42,264	47,335

Bear Case — FY29E

₹4,935

EV/EBITDA	15.0×
EBITDA FY29E	₹47,335 Cr
EV	₹7,10,029 Cr
Net Debt	₹29,000 Cr
Equity Value	₹6,81,029 Cr
Shares	138 Cr

Base Case — FY29E

₹5,278

EV/EBITDA	16.0×
EBITDA FY29E	₹47,335 Cr
EV	₹7,57,364 Cr
Net Debt	₹29,000 Cr
Equity Value	₹7,28,364 Cr
Shares	138 Cr

Bull Case — FY29E

₹5,964

EV/EBITDA	18.0×
EBITDA FY29E	₹47,335 Cr
EV	₹8,52,034 Cr
Net Debt	₹29,000 Cr
Equity Value	₹8,23,034 Cr
Shares	138 Cr

Revenue growth projection rationale: L&T guided 10–12% in FY27 due to Middle East disruptions. Growth expected to accelerate to 12–14% in FY28–29 as the record order book converts, private-sector orders scale, and new technology bets (data centres, green H2) commence revenue contribution.

Secondary: Sum-of-the-Parts (SOTP)

Given L&T's conglomerate structure with listed technology and financial services subsidiaries, SOTP provides a structural floor valuation. The approach values the standalone EPC business on P/E and each listed/unlisted subsidiary at market value or DCF.

Component	Basis	Stake	Market/Attributed Value (₹ Cr)	L&T Share (₹ Cr)	₹/Share
Standalone EPC (Base)	50× P/E × EPS ₹45.7	100%	₹3,15,330 Cr	₹3,15,330 Cr	₹2,285
LTIMindtree (LTM)	Market cap	68.5%	₹1,11,607 Cr	₹76,451 Cr	—
L&T Finance	Market cap	66.0%	₹74,916 Cr	₹49,445 Cr	—
L&T Technology Services (LTTS)	Market cap	73.57%	₹35,240 Cr	₹25,926 Cr	—
L&T Realty	Analyst estimate	100%	₹7,500 Cr	₹7,500 Cr	—
L&T Energy Green Tech	Analyst estimate	100%	₹2,500 Cr	₹2,500 Cr	—
Other Dev. Projects / Assets	Analyst estimate	100%	₹30,000 Cr	₹30,000 Cr	—
Total Subsidiary Value	—	—	—	₹1,91,822 Cr	₹1,390

Bear — 14% Discount

₹3,023

Standalone EPC	₹1,828/sh (Bear P/E 40×)
Subsidiaries	₹1,390/sh
HC Discount	14%

Base — 10% Discount

₹3,536

Standalone EPC	₹2,285/sh (50× P/E)
Subsidiaries	₹1,390/sh
HC Discount	10%

Bull — 8% Discount

₹3,838

Standalone EPC	₹2,559/sh (56× P/E)
Subsidiaries	₹1,390/sh
HC Discount	8%

SOTP gives a structural floor. At CMP ₹4,050, the market is pricing in a slight premium to SOTP Base (₹3,536), implying either: (a) a narrower holding-company discount, or (b) market anticipation of Lakshya-31 rerating. SOTP alone understates L&T's value given the growth trajectory of LTIMindtree, LTTS, and new bets.

Tertiary: P/E Model (ROE × BVPS)

Metric	FY22	FY23	FY24	FY25	FY26	FY27E	FY28E	FY29E
EPS (₹)	61.70	74.50	95.00	109.35	116.92	112.08	131.83	149.50
ROE	—	—	—	—	16.6%	13.0%	14.0%	14.5%
BVPS (₹)	—	—	—	—	—	862.13	941.65	1,031.05
P/E (Now Case)	—	—	—	—	35.4×	32.0×	35.0×	35.0×
Price (Now Case)	—	—	—	—	4,139	3,587	4,614	5,233
P/E (Bear)	—	—	—	—	—	26.0×	27.0×	28.0×
Price (Bear)	—	—	—	—	—	2,914	3,559	4,186
P/E (Bull)	—	—	—	—	—	38.0×	39.0×	40.0×
Price (Bull)	—	—	—	—	—	4,259	5,141	5,980

EPS FY27E dips due to the Labour Code one-off, margin compression from Middle East disruptions, and upfront investment in new bets. EPS recovers sharply in FY28–FY29 as order book converts at scale and new growth pillars (data centres, green H2, defence) contribute. P/E multiple is reasonable at 35× for a conglomerate with ~14–15% ROE trajectory.

DCF Model (Cross-Check — Conservative)

The DCF produces a significantly lower intrinsic value (₹1,763) than EV/EBITDA or SOTP because it is based solely on consolidated operating cash flows over a limited 3-year explicit period. The model cannot capture the full value of L&T's diversified portfolio of listed subsidiaries, long-duration growth opportunities, and strategic technology investments. Greater weight is therefore assigned to EV/EBITDA and SOTP.

Metric	FY27E	FY28E	FY29E	Terminal
Revenue (₹ Cr)	3,14,461	3,52,197	3,94,460	—
EBIT (₹ Cr)	39,308	44,025	49,308	—
NOPAT (₹ Cr)	29,481	33,018	36,981	—
FCFF (₹ Cr)	4,496	7,538	11,745	—
Terminal Value (₹ Cr)	—	—	—	2,46,649
Enterprise Value	₹2,72,300 Cr
Net Debt	₹29,000 Cr
Equity Value	₹2,43,300 Cr
DCF Price	₹1,763

WACC: 10% | Terminal Growth: 5% | Shares: 138 Cr. The DCF underweights L&T's conglomerate value. Primary valuation weight: EV/EBITDA (50%) + SOTP (30%) + P/E (20%).

Sensitivity Analysis

EV/EBITDA Sensitivity (FY29E Price)

EV/EBITDA	Price (₹)	vs CMP (₹4,050)
12.0×	3,906	-3.6%
13.0×	4,249	+4.9%
14.0×	4,592	+13.4%
15.0×	4,935	+21.9%
16.0×	5,278	+30.3%
17.0×	5,621	+38.8%
18.0×	5,964	+47.3%
19.0×	6,307	+55.7%

P/E Sensitivity (FY29E Price)

P/E Multiple	Price (₹)	vs CMP (₹4,050)
22×	3,289	-18.8%
26×	3,887	-4.0%
28×	4,186	+3.4%
32×	4,784	+18.1%
35×	5,233	+29.2%
38×	5,681	+40.3%
40×	5,980	+47.7%

05

Risk Factors

Key Risks & Mitigants

Risk	Description	Severity	Mitigation
Geopolitical — Middle East	~₹3 trillion order book and ~78% of international book in the Middle East. West Asia conflict has deferred awards, inflated logistics/insurance costs, and softened FY26 execution	High	Diversifying into RoW markets; strong domestic order backlog offsets; non-fund-based banking facilities secured for West Asia contracts
Margin Compression	PBDIT margin drifted from 11.6% (FY22) to 10.2% (FY26) as lower-margin EPC scales. New investment phase in data centres/green H2/semiconductors adds near-term drag	Medium-High	Hi-Tech Manufacturing (17.3%) and IT Services (19.5%) are mix-shift tailwinds; Lakshya-31 targets structural ROE improvement to 16–17%
Working Capital Normalisation	NWC improved to 4.1% of revenue on high customer advances. Management guides NWC to normalise to ~10% in FY27, constraining near-term FCF	Medium	Intrinsic to project lifecycle; will improve again as fresh order advances come in through FY27 order book conversion
Commodity Cost Inflation	Steel, cement, aluminium, copper are significant input costs. US tariff-driven trade policy changes moved commodity prices in FY26	Medium	Price-variation clauses on eligible contracts; supplier price lock-ins; active commodity hedging via derivatives/forwards
New Bets Execution Risk	Data centres, green hydrogen/ammonia electrolysers, semiconductor chip-design are capital-intensive with uncertain payback timelines	Medium	Parent gross D/E just 0.16× — balance-sheet strength absorbs investment-phase risk; portfolio approach limits single-bet concentration
Labour Code One-Off	New Labour Codes gratuity re-measurement reduced FY26 ROE by ~110 bps and PAT-owners to ₹16,084 crore. Recurring implications unclear	Low	One-time accounting re-measurement; underlying operations unaffected

06

Recent Developments

Key News & Market Impact

FY27 Revenue Guidance Tempered to 10–12% — Middle East Disruptions

Q4 FY26 Earnings Call, 5 May 2026

Management guided FY27 revenue growth of 10–12%, lower than historical 15%+ trajectory and some investor expectations. Execution delays due to geopolitical tensions in the Middle East — where ~40% of L&T's order backlog is located — were cited as key risks. Shipment delays, payment delays, and higher logistics/insurance costs are weighing on international execution velocity.

Impact — Short-Term Negative

Near-term earnings visibility reduced; FY27 EPS likely to dip before recovering in FY28–29
Market has partially de-rated the stock (from ~37× to ~34× trailing P/E)
Provides a buying opportunity if Middle East conditions normalize sooner than expected

L&T–Exail Partnership for Indian Navy Mine Countermeasure Vessels (MCMV)

Strategic Announcement, 2026

L&T entered a strategic partnership with French company Exail to provide an advanced unmanned mine countermeasure system for the Indian Navy's Mine Counter Measure Vessel programme. This expands L&T's fast-growing defence business under the Hi-Tech Manufacturing segment and increases participation in indigenous defence manufacturing (Atmanirbhar Bharat).

Impact — Long-Term Positive

Strengthens L&T's defence order pipeline (India defence modernisation is a multi-decade theme)
Hi-Tech Manufacturing carries the highest margins (~17.3% PBIT) — more defence orders improves blended margin
Supports long-term diversification into higher-margin, sticky businesses less susceptible to geopolitical disruption

07

Shareholding Pattern

Shareholding Pattern — Quarterly Trend

L&T has no identifiable promoter (0.0% promoter holding), making it a professionally-run, institutionally-owned company. FII and DII together control ~62% of the float, providing robust governance oversight.

Category	Mar-22	Mar-23	Mar-24	Mar-25	Jun-25	Sep-25	Dec-25	Mar-26
Promoter	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
FII	22.42%	24.48%	24.36%	19.80%	19.33%	19.48%	20.06%	18.78%
DII	33.49%	38.64%	38.08%	42.71%	43.48%	43.34%	42.99%	43.32%
Public	43.86%	36.65%	37.33%	37.25%	36.95%	36.92%	36.69%	37.64%

Institutional Ownership Shift: DIIs have systematically increased their stake from 33.5% (Mar-22) to 43.3% (Mar-26), reflecting domestic fund confidence in the L&T infrastructure story. FII holding has moderated (22.4% → 18.8%) — partly macro rotation and partly geopolitical uncertainty discount. A re-rating of Middle East exposure could bring FII interest back.

08

Peer Comparison

Wealth Creation (₹10,000 Invested)

Period	L&T	NCC	Nifty 50	RVNL (5Y)
10 Years	₹31,228 (3.1×)	₹21,690	₹28,442	—
5 Years	₹28,435 (2.8×)	₹18,333	₹14,800	₹79,233 (7.9×)
1 Year	₹11,655 (+17%)	₹6,875 (-31%)	₹9,460 (-5%)	₹6,231 (-38%)

L&T has significantly outperformed NCC and the Nifty 50 on 5Y and 10Y horizons, with superior risk-adjusted returns. RVNL's 5Y outperformance (7.9×) reflects its railway-sector concentration and government ordering surge — more volatile than L&T's diversified model. L&T's 1Y outperformance (+17%) vs. Nifty (-5%) demonstrates earnings resilience during a challenging year.

Peer Metrics at a Glance

Company	CMP	Mkt Cap (₹ Cr)	P/BV	Div Yield	1Y Return	5Y Return
L&T (LT)	₹4,050	₹5,57,074 Cr	5.1×	0.94%	+13%	+22%
KPIL (Kalpataru Projects)	—	—	—	—	—	—
RVNL (Rail Vikas Nigam)	—	—	—	—	-38%	+692%
NCC Ltd	—	—	—	—	-31%	+83%

L&T is India's scale leader in EPC with a uniquely diversified portfolio (EPC + IT services + financial services + technology bets) that both supports a premium valuation rating and complicates direct comparability with pure-play EPC peers.

09

Glossary

Key Terms

EPC: Engineering, Procurement & Construction — full-cycle project execution from design to delivery.
Order Book / Order Backlog: Total value of awarded contracts not yet converted to revenue; measures forward revenue visibility.
Book-to-Bill: Order book ÷ annual revenue — indicates how many years of revenue are already secured.
PBDIT Margin: Profit Before Depreciation, Interest and Tax margin — L&T's preferred profitability metric.
RTM: Regulated Tariff Mechanism — cost-plus regulated framework for power transmission (relevant for L&T's Power T&D segment).
TBCB: Tariff Based Competitive Bidding — market-based framework where efficiency gains are retained by the developer.
SOTP: Sum-of-the-Parts valuation — values each subsidiary/business separately and adds them up.
Holding Company Discount: Discount applied to conglomerate valuations to reflect liquidity, governance, and complexity premium absorbed by investors.
ROE (RONW): Return on Equity — PAT as a percentage of shareholders' net worth; L&T's primary Lakshya target metric.
Lakshya-26 / Lakshya-31: L&T's 5-year strategic plans (FY21–26 and FY26–31) with explicit revenue, order inflow, and ROE targets.
GCC: Gulf Cooperation Council — Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman; major source of L&T's international orders.
Hi-Tech Manufacturing: L&T segment covering defence, precision engineering, heavy engineering, nuclear equipment, and electrolysers.
LTIMindtree (LTM): L&T group's largest IT services subsidiary (68.5% stake); formerly LTI + Mindtree post-merger.
LTTS: L&T Technology Services — engineering R&D services subsidiary (73.57% stake).
FCFF: Free Cash Flow to Firm — operating cash flow after capex, available to all capital providers.
WACC: Weighted Average Cost of Capital — the discount rate applied to future cash flows in a DCF model.
MCMV: Mine Counter Measure Vessel — naval vessel for detecting/removing underwater mines; L&T–Exail partnership programme.

10

Self Research

Datewise research log▢ excluded

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