L&T Sees Margin Compression Amid War-Driven Inflation, Warns Persistent Impact in FY27

Larsen & Toubro's Q4 Earnings: Minimal Impact from West Asia War

Engineering conglomerate Larsen & Toubro (L&T) reported a 3% dip in its profit for the quarter ended 31 March to ₹5,325 crore, despite minimal impact from the regional war on its revenues and order inflows. The company's core segment, which includes all of L&T's businesses except information technology (IT) services, financial services, the Nabha power plant, and the Hyderabad Metro, saw a 8.3% Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin, below its guidance of 8.5%.

The input cost inflation in the March quarter "robbed" the company of its work on cost control, dragging down core segment margins. L&T's president, whole-time director, and chief financial officer, R. Shankar Raman, attributed the decline in margins to the inflationary effect of the war. The company's fiscal year 2027 (FY27) margin guidance remains at 8.3%.

Despite the challenges, L&T's order inflows are closely watched, indicating the volume of business it will be executing in the coming quarters. The company recorded new orders worth ₹89,772 crore in the fourth quarter, unchanged from the same quarter last year. This was largely due to a 4% decline in international order inflows.

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L&T's revenue for the quarter grew by 11% to ₹82,762 crore, while Ebitda grew by 5% to ₹8,610 crore. The company's revenue growth guidance for FY27 has been revised to 10-12%, due to the stalemate between Iran and the US at the Strait of Hormuz, which has blocked the free movement of ships.

The company has guided 10-12% growth in order inflows for FY27 compared to FY26. As part of its new five-year plan, dubbed Lakshya 31, L&T is aiming for 12-15% compounded annual growth in its revenues between FY26 and FY31. The company reported an ROE of 16.6% in FY26, short of its target of 18%.

Shares of Larsen & Toubro Ltd ended 1.07% lower on the BSE on Tuesday at ₹4,056.15 compared to a 0.33% decline in benchmark Sensex. The earnings were disclosed after market hours.

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