L&T Q4 FY26: Record Orders, Strong Cash Flow, and a Measured Lakshya 31

Larsen and Toubro closed FY26 with a familiar mix of strengths and stresses. The strength came from scale and visibility: FY26 order inflow rose 22% year-on-year to ₹4,356 billion, and the order book expanded 28% to ₹7,403 billion. Revenue grew 12% to ₹2,859 billion, while recurring profit after tax increased 18% to ₹172 billion.

The stress points were equally visible. EBITDA margins remained tight, particularly in the Energy Projects business, where legacy project cost overruns and close-out costs weighed on profitability. In the March quarter, execution was also impacted by supply chain disruptions linked to the West Asia conflict, an issue management described as near-term and manageable but still meaningful enough to affect momentum.

FY26 in numbers: scale improved, margins stayed range-bound

In Q4 FY26, group revenue was ₹828 billion, up 11% year-on-year. The quarter was led by faster growth in Hi-Tech Manufacturing, Energy and Financial Services, while Infrastructure Projects saw subdued progress and delivered only modest revenue growth. Group EBITDA margin for the quarter was 10.4% compared with 11.0% in Q4 FY25.

A key operational highlight was working capital. Net working capital to revenue improved to 4.1% in FY26 (excluding financial services and corporate), which management called a multi-year low. The company also reported a sharp rise in cash flow from operations excluding financial services to ₹355 billion in FY26 from ₹190 billion in FY25.

Segment picture: infrastructure stayed steady, energy executed but margins fell

The segment split shows a business still anchored in projects, but increasingly supported by services and manufacturing. In FY26, Infrastructure Projects delivered net revenue of ₹133,910 crore, Energy Projects ₹54,865 crore, and IT and Technology Services ₹53,497 crore. Hi-Tech Manufacturing expanded meaningfully from a smaller base to ₹14,109 crore.

Infrastructure Projects saw softer execution, which management linked to subdued progress in certain domestic and international projects and spillover effects from supply chain disruptions in March. However, profitability improved as job mix helped margins. For the quarter, Infrastructure Projects EBITDA margin improved to 8.8% from 8.0%.

Energy Projects stood out on execution. Q4 revenue grew 36% year-on-year, reflecting progress on a large order book. But margins fell sharply to 6.5% from 8.2% in Q4 FY25. Management said cost overruns and close-out costs in legacy projects were the main reasons, and they expect margins to improve after a couple of quarters.

Hi-Tech Manufacturing continued to scale on execution, with Q4 revenue up 45% and FY26 revenue up 46%. Order inflows in this segment, however, were weak over the year due to deferrals in the Precision Engineering and Systems business.

West Asia disruption: continuity on projects, but logistics costs rose

A large part of the Q4 narrative centered on the Middle East. Management clarified that project sites are functioning, employees are safe, and no projects have been cancelled. At the same time, they acknowledged near-term execution impact due to supply chain constraints and higher logistics and insurance costs.

The tone was practical rather than defensive. Management said they are working on alternate routes and logistics arrangements and are in active discussions with clients to seek relief for elevated costs. They also indicated that they are calibrating material movement depending on customer willingness to reimburse higher logistics costs.

The Middle East remains a core geography in the order book, with management citing close to ₹3 trillion of order book from the region as of March 2026.

Portfolio actions and Lakshya 31: divestments, new engines, and a revised reporting framework

Two portfolio actions were important. The company has signed SPAs for divestment of Nabha Power and Hyderabad Metro, and both SPVs have been classified as held for sale. Management said these transactions are expected to close in Q1 FY27.

Alongside, the group laid out Lakshya 31, its strategic plan for FY26-31. The targets are clear: order inflow CAGR of 10% to 12%, revenue CAGR of 12% to 15%, and ROE of 16% to 17%.

The company will also change segment reporting. The earlier Projects and Manufacturing structure will be redesigned as Projects, Products and Manufacturing, with Realty becoming a standalone reporting segment. Green Energy EPC capabilities such as renewables and offshore wind are being unified under an Energy Green segment.

On capital allocation, management outlined planned investments across growth engines over the plan period, including about ₹100 billion toward data centers (model dependent), about ₹150 billion toward green hydrogen, about ₹50 billion toward industrial electronics, and about ₹30 billion toward semiconductor design, largely for IP creation.

FY27 guidance: growth with a soft first half

Management provided explicit guidance for FY27. Group order inflows are expected to grow 10% to 12%, and revenue is guided at 10% to 12%. The company expects a softer first half due to supply chain disruptions, with a pick-up in the second half.

For margins, the company will now track Projects, Products and Manufacturing excluding Realty. On this reclassified basis, FY26 margins were 7.8%, and management expects the same to remain stable in FY27. Working capital is expected to normalize to around 10% in FY27 after the low base of 4.1% in FY26.

The quarter ended with the same underlying message that has defined L&T in recent years: strong visibility driven by large wins, disciplined balance sheet management, and incremental building of new engines. The open items are execution normalization in infrastructure, recovery in energy margins after legacy projects, and the pace at which new platforms such as data centers and industrial electronics translate investments into scalable returns.