Larsen & Toubro

Management remains confident in achieving the 8.5% target for the P&M business, despite current softness in Energy margins, due to expected execution pick-up in H2. (1 met, 2 in progress across 3 tracked commitments)

Q1 FY26 revenues stood at Rs 637 billion, which is approximately 23.6% of the annual target of Rs 2.7 trillion. (3 in progress, 1 met across 4 tracked commitments)

Management has reached an in-principle understanding with the Government of Telangana for the acquisition of its entire stake in L&T Hyderabad Metro. The government will pay Rs 2,000 crores for equity and assume Rs 13,000 crores of debt. (1 in progress across 1 tracked commitment)

The remaining 9-month prospect pipeline is reported at Rs 14.8 trillion. Combined with Q1 inflows, the visibility remains strong. (1 in progress across 1 tracked commitment)

The trailing 12-month ROE has improved to 17% as of June 2025, moving closer to the 18% target for the end of the Lakshya plan. (3 in progress, 1 revised across 4 tracked commitments)

L&T's scale advantage has strengthened further with a record-high order book, providing multi-year revenue visibility and allowing the company to be more selective in bidding. (2 expanding)

The Energy segment is seeing massive growth in order prospects, particularly in international hydrocarbon and green energy markets, with a significant jump in the pipeline value. (5 expanding)

The company achieved its best Net Working Capital (NWC) position in a decade, significantly improving cash conversion and financial resilience. (4 expanding)

The international mix is shifting further toward the Middle East, which now accounts for 81% of the international order book, driven by energy transition and industrialization in the region. (5 expanding across 3 engines)

Return on Equity (ROE) improved to 17.2%, up 110 basis points, indicating better capital efficiency and financial health. (1 expanding, 1 stable)

Cash flow generation has seen a massive reversal from a negative position last year to a robust positive inflow this quarter due to aggressive customer collections. (5 accelerating across 5 signals)

The company is diversifying into high-tech future industries including Green Hydrogen (clean fuel) and Semiconductor Design (computer chips).

Realty order inflow (pre-sales) is accelerating sharply. In Q2 FY26, Realty order inflow was ₹ 14.7 bn, up 85% from ₹ 8.0 bn in Q2 FY25. (2 accelerating across 2 signals)

Energy projects (Hydrocarbon and CarbonLite) saw robust quarterly inflows of Rs 460 billion, though margins are currently under pressure due to legacy projects. (1 steady across 1 signal)

Growth in the Energy segment's profit margins is currently being held back by cost overruns on older, competitively priced projects that are finishing up. — Energy EBITDA Margin: -240 bps YoY

This risk is easing significantly as the Government of Telangana has agreed in principle to take over the debt and equity, which will lead to a divestment and removal of the asset from L&T's balance sheet. (1 easing)

Slow-moving orders remain a small but persistent part of the portfolio at 2% of the total order book, primarily driven by the aforementioned JJM funding issues. (2 stable)

The risk is easing as management notes that even with lower oil prices, countries like Kuwait and Qatar are committed to spending on LNG and energy transition. They identify $55/barrel as the threshold for potential decision delays, which is currently below market rates. (1 easing)

Concentration risk is intensifying. The Middle East now accounts for 40% of Q4 FY25 order inflows (up from 34% for the full year) and 37% of the total order book. (4 intensifying, 1 easing)

Working capital management has improved significantly, with Net Working Capital (NWC) as a percentage of revenue hitting a decade low of 11.0%, providing a buffer against cost pressures. (1 easing)