Analyst Concall
FY26 order prospects strong but mindful of global risk - L&T
This story was originally published at 23:24 IST on 8 May 2025
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--L&T: FY26 order prospects pipeline is INR 19 trillion
--CONTEXT: L&T management's comments in post-earnings investor concall
--L&T: FY26 infra segment order prospects pipeline INR 9.64 trillion
--L&T: Order prospects pipeline robust but mindful of geopolitical factors
--L&T: Infrastructure investments form basis for domestic orders for co
--L&T: Domestic order size for co are more modest than overseas
--L&T: Domestic order book not rising sharply but has been steady
--L&T: Hydrocarbon business is a sizeable portion of the order book
--L&T: Margin benefit from overseas hydrocarbon orders to be visible in FY27
--L&T: Do not think curtains are down for coal-based power plants
By Rajesh Gajra
NEW DELHI – Larsen & Toubro Ltd. has strong order prospects pipeline of INR 19 trillion for 2025-26 (Apr-Mar) as compared to INR 12.1 trillion it had forecast for FY25 a year ago, the management said Thursday. Speaking to analysts and investors in a post-earnings conference call the L&T management said the company saw infrastructure segment order prospects pipeline for FY26 at INR 9.64 trillion and for hydrocarbons business at INR 7.47 trillion.
However, the management cautioned that this robust order prospects pipeline was just an assessment and the company was "mindful of how customers would decide to finally get into the bids given the volatile nature of (geopolitical) developments across the globe." L&T guided for a 10% on-year increase in order inflow in FY26 and according to the management this was based on the company's discussion with some of its strategic clients and the fact that the company was running at such a large base. "Depending on how the first six months (of FY26) pan out in terms of opportunities that come up our way and how much of order wins we get, we can possibly look to revising the guidance at a later point in time," the management said.
Of the INR 19 trillion order prospects pipeline for FY26, INR 7 trillion is domestic and the balance is international, the company said. The domestic order prospects pipeline looks "weak and small" in comparison to international, the management said. The domestic order book has not been rising sharply but it has been steady if one looked over a period of time, the management said.
"Unlike international where the order sizes are significant, domestic order sizes are still much, much more modest," the management said. To a question on why domestic order inflow did not pick in FY25, L&T's management said it was largely due to the fact that investments that get made around infrastructure development becomes the basis for domestic orders.
The company was trying to balance its capacities between opportunities in India, West Asia and other regions, the management said. L&T prefers to retain the opportunity to pick spots, especially when it has such large international order prospects, according to the management.
L&T's consolidated order book in its projects and manufacturing segments was at INR 5.791 trillion as on Mar. 31 of which 54% is domestic and the remaining is international, according to the management. The company's international order book is around INR 2.64 trillion of which around 81% is from West Asia and 19% from the rest of the world, the company said.
"In our view, the various countries in the Middle East (West Asia) are continuing to invest in oil and gas, power, power transmission and green infrastructure, and there is a focus of industrialisation where, besides the hydrocarbon sector, they are also looking into energy transition (from oil to gas) and minerals and metal sectors."
The overseas hydrocarbon business has a very big order book of almost INR 1.40 trillion, a significant portion of which was won over the last 15 months, the management said. But the company cautioned that the margin benefit from this large order book size in hydrocarbon will be visible from FY27 onwards and not in the current financial year. "Beyond a point, executing (projects) faster than what is scheduled is also a big challenge," the management said, in response to pointed queries from analysts about whether there was a leverage on margins the company due to its large hydrocarbon order book.
The domestic order book size of around INR 3.15 trillion was largely from orders from the government and government-owned companies. The share of central government orders in the domestic order book is 15%, for state governments and local authorities is 26%, and that for public sector corporations is 38%, according to the management. The balance 21% of the domestic order book is from private sector customers, the management said. On its power plants business, the management said India needs energy for growth, all of it cannot be given by renewable sources and coal does come into play.
On Thursday, shares of L&T closed 0.1% up at INR 3,323.90 on the National Stock Exchange of India. End
Edited by Deepshikha Bhardwaj
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