L&T Q2 Preview: PAT may rise 16% YoY on healthy order book, execution

Engineering major Larsen & Toubro (L&T) is expected to deliver a strong performance in the second quarter (Q2FY26), with consolidated revenue and profit likely to post double-digit growth on the back of robust execution and a healthy order book. An average of five brokerage estimates pegs consolidated revenue growth at around 15% year-on-year (YoY), while profit after tax (PAT) is projected to rise 16% YoY, supported by steady execution across domestic infrastructure and overseas hydrocarbon projects.

The company will announce its Q2 earnings on October 29. Investors will closely watch updates on new order inflows, execution ramp-up in the Middle East, and progress under its FY26 strategic roadmap.

Strong execution, large orders aid growth

Brokerages expect L&T’s core Engineering & Construction (E&C) segment to remain the key growth driver, supported by continued government infrastructure spending and large international orders in energy and hydrocarbons.

Motilal Oswal Financial Services expects consolidated revenue to rise 16% YoY, driven by a 19% increase in core E&C revenues. “Key monitorables include the pace of domestic ordering, conversion of the international project pipeline, and margin performance,” the brokerage noted. It expects the E&C EBITDA margin to remain flat YoY at 7.6%, while the consolidated margin could contract by around 50 basis points due to higher input costs.

During the quarter, L&T announced two ultra-mega orders in its energy and hydrocarbon divisions, further strengthening revenue visibility for the rest of FY26. Analysts also expect execution momentum in Saudi Arabia and across the GCC region to support strong international performance.

Margins steady, but mix-dependent

Margin trends remain a key focus area. Kotak Institutional Equities expects 20% year-on-year (YoY) growth in core EPC revenue and 17% in consolidated revenue but sees margins remaining largely stable at 8% for core E&C, compared with 7.6% a year ago. “The improvement will come from a better revenue mix with a higher share of hydrocarbon projects, though such mega orders may not be margin-accretive initially,” Kotak said.

The brokerage expects order inflows to remain broadly stable sequentially after a strong first quarter, implying low double-digit growth YoY.

Strategic focus on subsidiaries and green energy

According to Nuvama Equities, the government’s ongoing capex push and strong ordering in hydrocarbons, transmission and distribution, railways, smart cities, and water projects will keep the outlook positive.

However, it noted that private sector capex is yet to pick up meaningfully. “L&T’s FY26 strategic plan focuses on making subsidiaries self-sustainable, expanding into green energy segments such as hydrogen and battery storage, and exiting non-core assets,” Nuvama said.

The brokerage expects the company to maintain its FY26 guidance of 10% order inflow growth and 15% revenue growth, with core operating margins around 8.5%, which it believes have already bottomed out.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)