Larsen and Toubro Ltd has unveiled its new five-year plan called Lakshya 31, targeting 12-15% compounded annual growth from FY26 to FY31. According to reports from Mint, this translates to a doubling of revenue by FY31 to ₹5.8 trillion at the upper end of the target. The company expects 10-12% compounded annual growth in order inflows, which would result in annual order inflows of ₹7.75 trillion by FY31. L&T booked new orders of ₹4.4 trillion in FY26, taking its orderbook to ₹7.4 trillion. However, analysts suggest the company's guidance factors in modest H1 growth of 5-6%, with expectations of sharper H2 ramp-up, as noted by PL Capital analyst Amit Anwani.
The company has outlined strategic objectives including entry into green hydrogen and green ammonia supply, data centres, industrial electronics manufacturing and offshore and onshore wind energy development. As reported by Antique Stock Broking, L&T has earmarked capital expenditure of ₹42,400 crore for these projects, including ₹15,000 crore for green hydrogen, ₹10,000 crore for data centres, ₹5,000 crore each for industrial electronics and semiconductor manufacturing, ₹4,400 crore for realty business, and ₹5,000 crore for upgrading existing hydrocarbon facilities. The plan also aims to create a listed real estate business and maintain a disciplined capital allocation framework with continued focus on asset-light growth. A significant portion of capital expenditure—₹5,500-₹6,000 crore this year alone—is being directed toward semiconductors, data centres, electronics, and green hydrogen, with increased focus on defence electronics and industrial electronics.
Despite a strong order book, the real challenge lies in execution momentum, especially if global uncertainties persist beyond the first quarter. According to PL Capital analyst Amit Anwani, the 10-12% order inflow guidance implies single-digit order inflow growth in the infrastructure segment, which is underwhelming. The company achieved 16.6% return on equity in FY26 and has estimated 16-17% RoE over the Lakshya 31 period, which Anwani considers underwhelming given the company's exit from low-return assets like Nabha Power and Hyderabad Metro. Global uncertainty has already impacted Q4 performance by nearly 50 basis points on margins and resulted in an estimated ₹4,000-₹5,000 crore revenue impact. Management has guided for a muted Q1 and softer first half, with expectations of recovery only in H2, consistent with L&T's historical execution pattern where project execution typically happens in the second half of the year.
International markets are expected to remain a key driver, contributing 40-50% of inflows, with Middle East capex cycles likely to resume once stability returns. The Middle East, which accounts for nearly 38% of L&T's order book, remains a critical swing factor with exposure of around ₹3 lakh crore in the region. Management has indicated that normalization of geopolitical conditions could unlock a stronger execution cycle from Q2 onwards. Beyond cyclical outlook, L&T's long-term "Lakshya" plan (FY31) marks a structural shift in capital allocation, with the company targeting 12%-15% revenue CAGR over the next five years, alongside 10%-12% order inflow growth. Despite global uncertainties, the 12%-15% revenue CAGR target appears achievable, supported by a robust ₹7.5 lakh crore order book and strong growth in non-infrastructure verticals such as energy, renewables, defence, and heavy engineering.
