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Informist, Tuesday, Jun. 9, 2026

MUMBAI – Investors betting on infrastructure behemoth Larsen & Toubro Ltd. can expect a return on equity of around 15-16% in the coming few years as the company is entering into a period of investment, Chief Financial Officer R. Shankar Raman said at an event hosted by ICICI Securities on Tuesday. "We are entering into a period of investment, so the next few years you will see us commit a bit of our balancesheet in areas which we think is important for the company," Raman said.

In Raman's assessment, L&T has often swung between periods of divestment and investment. Going forward, the company will bank on investments. "We brought RoE (return on equity) from 9% to about 17% (now). Now, I see over the next few years, thanks to the investment and gestation period that it comes with, the RoE could be between 15-16%, and not 17-18%," Raman added. He called on investors to continue supporting the company as it invests in future-ready operations.

Zooming out beyond L&T's operations, Raman also addressed the current state of India's public infrastructure. "I think we still, despite all the investments that have happened over the last 20 years, considerably lacking in terms of the quality of infrastructure that we have to our citizens," Raman said. 

Investments in public infrastructure can help the country become stronger, which especially counts during current times when geopolitical conflicts lay bare the gaps in countries' economies, Raman said. "What started as some kind of weekend newsread, has now become a new normal for us. One doesn't know how much more decoupled we will be in terms of economy," he said, adding that many artificial barriers of trade have also come into play.

The executive called on India to find means to invest in urban and industrial infrastructure, which would require a lot more investment. "I think from India's point of view, it is very important to continue the investment philosophy. I think we have a country with lots of consumers waiting to consume, lots of people waiting to get their employment. This is going to be triggered by the investment momentum," he added.

India does not have a dearth of financial resources to fund these investment programmes, Raman said. "I think global development institutions as well as Indian institutions do support good programmes. Our problem has been the ability to execute the programmes to the plans," he said.

This leads to delays in execution of projects, which in turn leads to poor returns on the investments made on these projects. He called on all parties related to the projects, such as the bureaucracy, policymakers, and others to work towards solving the problem. "Today I find that's the biggest challenge, that the unison of purpose is possibly not at its best," he added.

WEST ASIA

L&T gets a significant number of orders from West Asia, to the point where Raman terms it the company's "second home". "Outside of India, the largest footprints that we have is in those five, six countries in Middle East (West Asia). And within that, Saudi Arabia, Qatar and the three larger markets for us," he said.

Working on orders in West Asia has helped L&T learn how to work at scale. "Because of the largeness of these contracts, we were also forced to work in consortium with global majors," he said. "And it has been an extremely enriching experience because the methods that they follow, the work processes that they adopt, is something that you can learn if you work shoulder to shoulder with them on a project," he added.

The company expects to use it learnings from West Asia in other markets, including India. "So we are trying to move a little more than Middle East because growth would force us to discover geographies...," he added. 

LABOUR, TECH

Around five years back, L&T had an order book of INR 3.5 trilion. Since then, its order book has swelled to INR 7.5 trillion and the company wants to take it to INR 15 trillion in the next five years. In the given time frame, the company found consistent supply of required labour difficult. At times, labourers have to leave for their villages due to seasonal factors or for other family reasons.

L&T is increasingly relying on automating its labour tasks to bridge this gap. "Automation has also helped us solve this problem of unsafe working habits. So to that extent, I think automation (is needed) in a much, much larger scale," Raman said.

"We still think we have a working process, but you will find us get more and more towards that direction. But we're not suggesting we will employ less, I think the kind of work that we employ the people will change," he said.

Given the current circumstances, Raman said India must aspire to be more technology-led going forward. "I think it's important that we own processes and technologies. We are great users of technology, but we don't own foundations of technology. I think it's very important that the country gets out of the mindset of trading in technology to create technology," he said. In the next five years, L&T's operations specifically, should also be more tech-led, he said.  

At 1302 IST, shares of L&T traded at INR 3,906.80 on the National Stock Exchange, up 0.8% from Monday. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Anand JC and Anshul Choudhary

Edited by Akul Nishant Akhoury

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