L&T Q1 FY27: Orders Stay Strong, Execution Slows, Cash Discipline Stands Out

Larsen and Toubro began FY27 with a familiar pattern for a large project and services conglomerate: strong booking momentum, but a softer execution run-rate in parts of the portfolio.

For Q1 FY27, the group reported order inflow of INR 1,080 billion, up 14% year on year. Revenue increased 7% to INR 679 billion, and reported profit after tax rose 14% to INR 41.2 billion. The order book expanded 27% year on year to INR 7,790 billion as of 30 June 2026, with international orders at 52% of the total.

Management positioned the quarter as resilient under a turbulent operating environment. The execution commentary, however, was more nuanced: revenue growth was described as subdued due to the execution stage of the order book and supply chain constraints in the Middle East, while group EBITDA margin before other income compressed to 9.0% from 9.9%.

Order book quality improves as international momentum builds

The headline order numbers were supported by two clear drivers. First, sustained private sector ordering in India, particularly in Metals and Minerals and Buildings and Factories. Second, large offshore wind awards in Europe.

The company highlighted an addressable prospects pipeline of about INR 15 trillion for the near term. On the earnings call, management said the opportunity pipeline for the remaining nine months of FY27 remains healthy at about INR 15.07 trillion, with domestic prospects of INR 7.45 trillion (49%) and private sector share of around 45% within domestic.

A key strategic talking point was offshore wind. Management said the offshore wind business secured an ultra-mega order under the TenneT North Sea HVDC offshore wind program, taking cumulative offshore wind transmission capacity secured over the past three quarters to around 8 GW. The Deputy MD indicated this corresponds to roughly INR 57,000 to 60,000 crore of order book and is expected to be executed over four to five years, with most of the fabrication planned at L&T’s Kattupalli yard in Chennai.

Financial performance: PAT rises as operating margin tightens

While PAT grew, operating profitability was mixed. The group’s EBITDA in the financial construct declined 3% year on year to INR 61.2 billion and margin fell to 9.0%. Management attributed the margin pressure to lower execution levels, forex variation in IT subsidiaries, and higher expected credit loss provisions.

Other income was a meaningful offset. It rose 75% year on year to INR 23.8 billion. The CFO attributed this to higher group surplus funds and improved yields, while also cautioning it may not be a permanent run-rate once cash is deployed into new investments.

Financial summary (Q1 FY27)

Segment read-through: services grow, EPC faces execution and mix issues

The quarter underscored the value of L&T’s diversified model.

Technology, Platforms and Services delivered 15% year on year revenue growth to INR 146.3 billion, led by both LTM and LTTS. Segment EBITDA margin moderated to 19.2% from 19.5%, with management citing salary hikes and forex variation.

Financial Services reported income from operations of INR 50.4 billion, up 27%, with PAT of INR 9.0 billion, up 29%. The business remained retail-heavy with retail book at 98% and reported RoA of 2.48% for Q1 FY27.

In the Projects, Products and Manufacturing portfolio, execution challenges were more visible. Infrastructure and Utilities revenue declined 3% year on year to INR 218.6 billion and margin slipped to 5.1%. Management said the decline reflected the execution phase of the order book and higher ECL provisions.

Energy Conventional grew revenue 14% year on year to INR 142.4 billion with margins broadly stable at 7.6%. Order inflows in this segment were sharply lower year on year due to deferred awards and a high base that included large CarbonLite Solutions orders last year.

Energy Green revenue declined 11% to INR 56.1 billion due to supply chain disruptions in the solar business, even as order inflow was strong on the back of offshore wind awards.

Manufacturing and Products grew 9% in revenue to INR 44.9 billion, but margin dropped to 15.2% from 17.5%, which management attributed largely to sales mix.

Segment revenue (Q1 FY27)

Cash discipline and portfolio actions: the quiet positives

Working capital improvement remained a highlight. Net working capital to sales improved to 4.9% as of June 2026 from 10.1% a year earlier, a 520 bps improvement. The CFO said collections excluding Financial Services were INR 658 billion in Q1 FY27 versus INR 603 billion in Q1 FY26.

Cash flow from operations excluding Financial Services was INR 43.4 billion versus INR 58.1 billion in the prior year quarter. The company presented both reported cash flow and an excluding Financial Services view to improve clarity.

On portfolio pruning, the divestment of Nabha Power was completed on 25 June 2026. Management reiterated this was aligned with the strategy to exit the concessions portfolio. L&T also signed an agreement to divest its entire stake in L&T Metro Rail Hyderabad Limited to Hyderabad Metro Rail Limited, with the estimated completion date revised to 30 September 2026.

Guidance: maintained, but execution visibility remains the swing factor

Management maintained FY27 guidance across key metrics. Order inflow growth guidance remains 10 to 12%, supported by the INR 15 trillion prospects pipeline. Revenue growth guidance remains 10 to 12%, though management said it is prudent to wait for greater clarity given the rapidly evolving Middle East situation. PPM margin guidance remains around 7.8% and working capital guidance around 10%.

The call also provided two useful quantifications. Hyderabad Metro loss booked for April was INR 0.38 billion. Elevated ECL provisions were stated at about INR 2.5 billion for the quarter, primarily linked to Water and Effluent Treatment and select India projects.

The quarter’s core theme was not about a sudden acceleration. It was about maintaining momentum while navigating supply chain disruption risk, protecting margins through disciplined contracting, and using a stronger order book to build long-cycle capabilities such as offshore wind. With guidance unchanged and working capital improving, the next few quarters hinge on whether execution normalizes as the company adapts supply chains and as Middle East award activity and project logistics stabilize.