L&T Q1 Preview: Strong Profit Growth Anticipated, But Order Weakness and Margins May Cap Upside
Larsen & Toubro (L&T), India’s engineering and construction giant, is expected to report a robust year-on-year (YoY) net profit growth of 25% for the first quarter of FY26, driven largely by execution strength in overseas and core EPC operations. The results are slated for release on July 29.
According to a Moneycontrol poll of six leading brokerages, net profit is forecasted to reach ₹3,469 crore, while consolidated revenue is projected to grow 15% YoY to ₹63,451 crore. However, despite strong topline momentum, EBITDA margins are likely to remain flat at 10.2%, limiting near-term optimism.
Profit Estimates Range:
- Highest: ₹3,490 crore (Emkay Securities)
- Lowest: ₹3,300 crore (Nuvama)
🔍 Key Earnings Drivers
🔧 Execution Strength
Topline growth will be primarily fueled by strong execution in international markets, including Saudi Arabia and the GCC region.
- Kotak expects 19% growth in EPC revenues, led by overseas delivery.
- Nomura forecasts 18% growth in core segments, with key contributions from power transmission and building projects.
- MOSL estimates 12% growth, driven by infrastructure and hydrocarbons.
Execution of legacy projects and delivery momentum in the Middle East remain crucial levers.
📉 Stable Margins
Margins are likely to stay flat YoY, with:
- Nomura projecting core EBIT margin expansion by 17 bps to 6.4%,
- Service segment margins seen dropping sharply (down 174 bps to 14.8%).
- Kotak estimates 8% E&C margin, though warns early-stage projects may dilute short-term gains.
- MOSL anticipates a slight YoY margin expansion of 20 bps.
📦 Order Inflows Likely to Disappoint
While execution is strong, the pace of new orders is expected to remain subdued:
- Nomura sees Q1 order inflows at ₹39,700 crore, led by power and infrastructure.
- Kotak warns of a mid-teen percentage decline YoY due to sluggish FY26 starts.
- MOSL notes slow order conversion in the Middle East and weak private sector activity.
- Nuvama sees continued dependence on public capex in smart cities, rail, and water sectors.
🔎 What Analysts Will Monitor
Investors and analysts will focus on:
- FY26 order book and outlook, especially from the Middle East
- Commentary on public vs private sector capex visibility
- Margin trajectory for core EPC vs service segments
- Working capital and green energy projects (e.g., hydrogen, battery storage)
Conclusion:
L&T is expected to deliver a strong Q1 performance in terms of profit and revenue, underpinned by solid execution. However, muted order inflows and margin headwinds may temper expectations for the near term.
