L&T Q4 FY26: Profit slips, order book hits record

Shares slide after results and strategy update

Larsen & Toubro (L&T) shares fell more than 3% in early trade on Wednesday after the engineering and infrastructure major posted mixed Q4 FY26 numbers and outlined its new Lakshya 2031 strategy plan. The stock touched around a more than three-week low during the move, reflecting investor focus on margins, execution and the pace of fresh order inflows.

In early trade, the stock fell as much as 3.3% to ₹3,921.4, extending losses after a 1.1% dip in the previous session post results. Another market update put the stock down 3.02% to ₹3,932, with an intraday low of ₹3,900 versus a previous close of ₹4,054.50. Reuters also reported the stock last down 3.6% at ₹3,908.

Despite the pullback, L&T remains up 17.8% over the past one year, outperforming the Nifty 50, which is down 0.7% over the same period. The stock is also nearly 11% below its 52-week high of ₹4,440.

Q4 FY26 earnings: profit down, revenue up

L&T reported consolidated net profit (PAT) of ₹5,326 crore for Q4 FY26, a 3% year-on-year decline. Revenue from operations rose 11% year-on-year to ₹82,762 crore, indicating steady execution even as profitability faced pressure.

Operating performance was mixed. EBITDA increased 5% to ₹8,610 crore, but EBITDA margin narrowed to 10.4% from 11% a year ago. L&T attributed the year-on-year decline in reported profit primarily to an exceptional gain of ₹475 crore recorded in the corresponding quarter last year.

The company also disclosed that recurring PAT rose 5% to ₹5,289 crore, separating the core run-rate from exceptional items. Analysts, however, compared reported profit against expectations. One market note cited an expected net profit of approximately ₹5,501 crore, making the reported bottom line a miss.

Order inflows and record backlog support visibility

L&T’s order inflows for the January-March quarter stood at ₹89,772 crore. The total order book hit a record ₹740,327 crore as of March 31, 2026, up 28% year-on-year.

International orders accounted for 52% of the overall order book, underlining the company’s global exposure. A separate market note also flagged overseas exposure as a key variable for execution and costs, especially during periods of regional disruption.

West Asia disruptions add to execution and margin questions

Market commentary around the results highlighted the impact of conflict in West Asia on L&T’s overseas projects. The disruptions were cited as a driver of delays in project execution, payment deferrals and rising input and logistics costs.

L&T expects the West Asia conflict to weigh on its performance in H1 FY27, citing supply chain disruptions and higher input costs. This matters because international orders make up a large share of the backlog, and overseas performance can influence consolidated margins and working capital.

FY27 outlook: slightly slower growth guidance

Reuters reported that L&T forecast revenue growth of 10-12% for the current fiscal. Separately, the company guided for 10-12% revenue growth with stable margins for FY27.

Brokerages focused on whether that growth is achievable from a high base, and whether margins can be protected amid cost pressures and shifting regional mix. The guidance became an anchor point for near-term expectations, especially after the Q4 margin decline.

Lakshya 2031 plan triggers a split among brokerages

L&T’s Lakshya 2031 strategy plan drew mixed reactions. Concerns flagged by brokerages included execution, margins, order inflow momentum and returns from new investments planned under the strategy.

Jefferies noted that L&T exceeded its Lakshya 2026 goals on revenue and order flow CAGR. It also highlighted the Lakshya 2031 targets of 10-12% order inflow CAGR and 12-15% revenue CAGR. Others were less convinced, calling the new guidance underwhelming or contingent on external factors.

Brokerage calls: downgrades, target cuts, and two bullish views

Nomura downgraded L&T to ‘Neutral’ and cut its target price to ₹3,940 per share, citing subdued operating performance in Q4 FY26 and a less optimistic view on FY27 order inflow momentum. It also cut FY27 and FY28 earnings estimates by 8%.

HSBC retained a ‘Hold’ rating and lowered its target price to ₹3,800 per share. It said Q4 order inflows and revenue remained strong despite limited impact from the West Asia conflict, but warned that sustaining large inflow growth on a high base could be difficult. HSBC also flagged that planned investments could weigh on return on equity.

Jefferies maintained a ‘Buy’ rating with a target price of ₹4,885 per share. It attributed the EBITDA miss mainly to lower engineering and construction revenues linked to the US-Iran-Israel conflict.

CLSA kept an ‘Outperform’ rating and set a target price of ₹4,842 per share. It highlighted a 22% rise in new orders as a positive surprise and cited a 690 basis-point fall in working capital during Q4 FY26. But it also said L&T’s FY27 guidance of 10-12% growth in new orders and execution, with flat margins, remains contingent on the reopening of the Strait of Hormuz from Q2 FY27 onward.

Key numbers and market snapshot

Corporate actions: divestments, dividend, CFO appointment

In its exchange filing, L&T said it executed pacts to divest its full stakes in Nabha Power Ltd and L&T Metro Rail (Hyderabad) Ltd, adding that closure of these transactions was likely by the end of next month.

The board recommended a final dividend of ₹38 per equity share for FY26, subject to shareholder approval. The company also named P Ramakrishnan as its next chief financial officer.

What investors are watching next

The immediate debate around L&T is less about backlog strength and more about conversion and profitability, particularly with West Asia-linked execution risks and input-cost pressures flagged in market commentary. Brokerages also differ on whether Lakshya 2031 offers enough upside relative to the investments required and the return metrics.

Near-term focus is likely to remain on how order inflows track against the 10-12% growth guidance, whether margins stabilise as guided, and how quickly international projects normalise amid supply chain disruptions. Investors will also track updates on the planned divestment closures and any additional commentary around working capital discipline.