Larsen & Toubro (LT IN) – Q2FY26 Result Update – Decent Q2 despite infra drag; guidance intact – BUY
Published on 30 Oct 2025
Larsen & Toubro (L&T) reported consolidated revenue growth of 10.4% YoY, while EBITDA margin contracted by 32 bps YoY to 10.0%. Execution challenges in the Water projects and prolonged monsoons weighed on progress in Infrastructure projects, whereas robust execution across Energy Projects and Hi-Tech Manufacturing supported overall growth. Order prospects remain strong at Rs10.4trn for H2FY26, driven primarily by Infrastructure and Hydrocarbon opportunities. L&T’s potential strategic entry into electronic manufacturing services (EMS) and its partnership with BEL for India’s fifth-generation AMCA program underscore the company’s focus on diversification and leveraging emerging growth avenues. Furthermore, sale of loss-making Hyderabad Metro is anticipated to improve L&T’s balance sheet and profitability. During the quarter, the award of two ultra-mega orders in the onshore and offshore Hydrocarbon business further strengthened its position and reinforced management’s confidence in achieving its guidance of ~10% YoY order inflow growth along with ~15% revenue growth and Project & Manufacturing (P&M) margins of ~8.5% in FY26. We roll forward to Sep’27E and maintain our ‘Buy’ rating valuing the core business at a PE of 22x Sep’27E (25x Mar’27E earlier) arriving at a SoTP-derived TP of Rs4,766 (Rs4,144 earlier).
