Larsen & Toubro (LT IN) – Q4FY26 Result Update – Mixed Q4, supply chain disruptions to dampen H1FY27 – BUY
Published on 06 May 2026
Larsen & Toubro (L&T) reported a mixed Q4FY26 performance with revenue growth of 11.3% YoY, while EBITDA margin contracted 62bps YoY to 10.4%, reflecting project mix and cost pressures. Management maintained a cautious near-term outlook amid ongoing Middle East conflict, guiding for ~10-12% growth in revenue and order inflows for FY27 with flattish PP&M margins (~7.8%), indicating limited margin expansion in FY27. Furthermore, the company’s Lakshya 31 guidance implies steady growth, with order inflow and revenue CAGR targets of 10-12% and 12-15%, respectively, over FY26-31. However, the ROE guidance of 16-17% for the same period (vs. 16.6% in FY26) remains underwhelming. While the order pipeline (~INR17.8trn) and order book (~INR7.4trn) remain robust with high exposure to the Middle East (~78% of international OB Rs3.28trn), execution is expected to remain soft in H1FY27 due to supply chain constraints and delays in domestic projects amid geopolitical uncertainties, with recovery likely in H2FY27. The Energy segment faced margin pressure due to legacy projects which are now largely concluded, while Infrastructure execution remains uneven. Segment restructuring and non-core asset divestment (Hyderabad Metro and Nabha Power) are likely to improve focus on core businesses and result in better capital allocation in mid-term while its foray into new businesses such as defence, electronics, data centers and green energy are likely to open new avenues for growth in long term. We revise our FY27-28 EPS estimates by -8.0%/-10.4% factoring in supply chain constraints and execution challenges. We maintain ‘Buy’ rating and roll forward to Mar’28 with a revised SoTP-derived TP of Rs4,632 (Rs4,806 earlier), valuing the core business at a P/E of 22x Mar’28E (22x Sep’27 earlier).
