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Informist, Thursday, Oct. 23, 2025

 

By Rajesh Gajra

 

NEW DELHI - Larsen & Toubro Ltd. is expected to report strong earnings growth for the September quarter over the year-ago quarter, according to analysts. The growth of the bottom line is, however, expected to be lower than the on-year growth the company had reported in the trailing quarter.

 

The operating profit margin of the country's largest engineering, procurement, and construction company is also seen contracting slightly due to higher costs and execution mix. In its core projects and manufacturing business, the engineering behemoth operates in three key segments - infrastructure projects, energy projects, and hi-tech manufacturing.

 

L&T is likely to report a consolidated net profit of INR 40.8 billion for the September quarter, up 20% on year and 13% on quarter, according to the average of estimates by nine brokerages. The estimated consolidated revenue from operations of the company is INR 710.6 billion, up 16% on year and 12% sequentially. In the trailing quarter, the company had reported a 30% increase in net profit at INR 36.2 billion and a 16% rise in revenue from operations at INR 636.8 billion.

 

The net profit estimates range from a low of INR 38.3 billion by Nuvama Wealth Management to a high of INR 43.3 billion by JM Financial Institutional Securities. Among the revenue estimates, the lowest is INR 686 billion by Nuvama and the highest is INR 719.1 billion by Kotak Securities.

 

In its services business, the company has a financial services subsidiary, L&T Finance Ltd., and two IT and technology subsidiaries, LTI Mindtree Ltd. and L&T Technology Services Ltd. These three subsidiaries have already announced their respective September quarter earnings.

 

L&T Finance, in which L&T has 66.1% stake, reported a 5.6% rise in its consolidated net profit at INR 7.3 billion in the September quarter and a 7.9% on-year increase in its total income from operations at INR 43.4 billion. L&T Technology Services, in which L&T holds 73.6% share, reported a 2.9% on-year increase in its September quarter consolidated net profit at INR 3.3 billion and a 16% rise in revenue at INR 29.8 billion. The consolidated net profit of LTI Mindtree, in which L&T has 68.6% stake, increased 12% on year to INR 14 billion in the September quarter, while the revenue increased 10% on year to INR 103.9 billion.

 

In its core business of engineering, procurement, and construction, L&T's execution growth is seen at 18% on year for the September quarter, brokerage Nomura said in a preview report. This will likely be "driven by the hydrocarbon segment," it said. The engineering company's consolidated revenue is seen growing 16% on year, led by around 19% growth in its projects and manufacturing business, according to brokerage Prabhudas Lilladher.

 

There is likely to be "weakness" in L&T's execution as far as domestic orders are concerned, but this is likely to be "more than...compensated by strength in overseas execution," Kotak Securities said in its report. Notwithstanding the mixed views of analysts on L&T's top line performance for the September quarter, its order momentum during the quarter is seen stable by most analysts.

 

L&T received orders in the range of INR 305 billion to INR 465 billion following the announcement of its June quarter financial results, brokerage Prabhudas said. The company's "core order inflows" are expected by Nomura to increase 8% on year to INR 678 billion, "led by an ultra mega order" of more than INR 150 billion in the hydrocarbon segment.

 

On the operating profit and margins front, L&T's earnings before interest, tax, depreciation, and amortisation will likely be INR 71.1 billion in the September quarter, according to the average of estimates by eight brokerages. The company's EBITDA margin is expected to "largely remain flat at around 10.3%", according to brokerage Prabhudas Lilladher.

 

"We estimate L&T's margins to contract by 35 bp y-y (basis points year on year) on account of execution mix," Nomura said. L&T's EBITDA margin for its core engineering and construction businesses is expected to be flat on year at 7.6%, while the consolidated EBITDA margin is likely to decline 50 basis points on year, Motilal Oswal Financial Services said in its report.

 

L&T will announce its September quarter financial results on Wednesday. Investors will watch out for the management's commentary on order prospects across different segments, ordering activity from West Asia, domestic execution pace, and L&T's exit from Hyderabad Metro developmental project, brokerage Prabhudas Lilladher said. The company's outlook on international ordering amid growing uncertainty, and commentary on public capex, are the key things to watch out for, according to Nomura.

 

The stock is currently up around 10% from the company's June quarter earnings announcement on Jul. 29, when it had closed at INR 3,495.60. Of the 16 brokerage reports on the company available with Informist, 15 have a 'buy' call on the stock at an average target price of INR 4,208, and one has a 'hold' recommendation.

 

On Monday, shares of L&T closed at INR 3,887, up 0.4%, on the National Stock Exchange.

 

Following are the September quarter earnings estimates for Larsen & Toubro from nine brokerage firms in descending order of estimate of net profit:

 

Brokerage	Net sales	Net profit	EBITDA
	(In INR million)
JM Financial Institutional Securities Pvt Ltd	7,14,370	43,261	72,714
Prabhudas Lilladher Pvt Ltd	7,15,793	43,137	73,806
HDFC Securities Ltd	7,18,900	42,000	71,800
Kotak Securities Ltd	7,19,132	41,442	70,873
Emkay Global Financial Services Ltd	7,00,927	40,655	70,600
Nomura Equity Research	7,11,280	40,539	71,013
Sharekhan Ltd	7,14,030	39,270	---
Motilal Oswal Financial Services Ltd	7,15,302	38,815	69,844
Nuvama Wealth Management Ltd	6,85,963	38,260	68,481
Average	7,10,633	40,820	71,141

 

End

 

Edited by Avishek Dutta

 

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