Larsen & Toubro delivered exceptional Q2FY27 results with consolidated profit after tax surging 33% year-on-year to ₹5,202 crore compared to ₹3,926 crore in Q2FY26. The engineering and construction major reported consolidated revenue of ₹78,750 crore for Q2FY27, registering 16% YoY growth from ₹67,984 crore in the corresponding quarter last year. According to the latest financial results, EBITDA rose marginally by 1% YoY to ₹6,845 crore compared with ₹6,806 crore in Q2FY26. However, EBITDA margin contracted to 8.7% from 10% a year earlier, falling short of the poll estimate of 9.7%. The revenue growth was driven by accelerated progress across businesses in the Projects, Products and Manufacturing (PPM) portfolio, with the figure comfortably ahead of the estimate of ₹71,880 crore. International revenue stood at ₹45,870 crore, accounting for 58% of the total revenue during the quarter.
L&T achieved its highest-ever quarterly order inflow of around ₹1.48 lakh crore, marking a 28% increase from approximately ₹1.2 lakh crore in the year-ago period. The company secured orders worth ₹147,665 crore during Q2FY27, registering a 28% year-on-year increase. Major order wins came from its Hydrocarbon, CarbonLite Solutions, Public Spaces & Airports, and Power Transmission & Distribution businesses. The growth was led by ultra-mega and mega orders in conventional energy businesses, with the company estimating its near-term addressable prospects pipeline at around ₹10 lakh crore. On a half-yearly basis, the company received orders worth ₹2,55,678 crore, marking a 22% YoY increase. International orders stood at ₹92,375 crore, contributing 63% to the total order inflow during Q2FY27, with the growth supported by strong order inflows across Hydrocarbon – Offshore, Offshore Wind, Minerals and Metals, and Residential and Commercial Buildings businesses.
L&T's operating margins came under pressure amid higher costs and an unfavourable revenue mix. The company attributed the margin contraction primarily to lower margins across its portfolio and a change in revenue mix, with a higher contribution from its Projects, Manufacturing and Products (PP&M) businesses. Increased activity levels, higher staff costs and selling, general and administrative expenses also weighed on costs. The product and manufacturing segment delivered exceptional results with Ebitda margin expanding by 226 basis points to 15.8%, helping offset challenges in the projects business where margins declined by 52 basis points year-on-year to 6.3% despite revenue growth of 19% to ₹53,911 crore. The overall PPM Ebitda margin narrowed by 25 basis points to 7.03%, though revenue from the core business segment increased by 20% year-on-year to ₹58,391 crore.
A significant positive surprise in Q2 was the dramatic improvement in net working capital management. As reported by Mint, net working capital fell to 1.7% of revenue from 10.2% in Q2FY26 and 4.9% in Q1FY27. This substantial reduction in working capital levels is expected to boost return on capital employed and help reduce net finance costs. The management indicated that advances received from customers might have contributed to this improvement, with guidance to maintain NWC below 10% in FY27 as order execution accelerates.
L&T's product and manufacturing segment is positioned for continued growth with the upcoming semiconductor production start and expansion into industrial electronics. The company's entry into industrial electronics in April is expected to gain momentum with the start of commercial production of EV traction motors in Q3. The management reiterated its margin guidance of 7.8% for FY27 and maintained unchanged order inflow and revenue growth guidance of 10-12% each for FY27. The company also plans to scale up its AI data centre capacity to 110 MW over the next two years from an existing 30 MW facility near Chennai. Chairman and Managing Director S.N. Subrahmanyan commented that the company has delivered a strong quarter in an ever-changing geopolitical landscape, reflecting continued customer confidence and ability to secure large and complex orders across sectors and geographies.
Strong Q2 execution and order inflows positively impacted investor sentiment, with L&T's shares rising 4% on Wednesday. Based on current market capitalization post-holding company discount at ₹1.25 trillion, the company's net market capitalization stands at ₹4 trillion. According to Mint, the PPM business trades at a price-to-earnings ratio of 23x-25x based on FY28 estimates from Motilal Oswal Financial Services and Nuvama Institutional Equities, with the street monitoring how semiconductor, industrial electronics, and AI data centre businesses develop.
