A surge in international business, particularly from the Middle East, helped India’s largest engineering and infrastructure company Larsen & Toubro (L&T) grow its order book at a compounded annual rate of over 15% between FY21 and FY25, even as growth in domestic orders chugged along at a slower pace.
The company believes that growth in international business will once again outpace domestic business expansion in FY26. It sees a business prospect pipeline of ₹12 trillion from international markets compared to ₹7 trillion from the domestic market during the year. This includes upcoming contracts that the company has identified for bidding. L&T usually wins 20-25% of the contracts it bids for.
“There is a massive international opportunity that the company is capitalising on. With a higher international order pipeline visibility, the orderbook is likely to be more than half from international next year,” said Amit Anwani, VP and lead analyst for capital goods, industrials and defence at Prabhudas Lilladhar Pvt. Ltd.
“There are some risks like headwinds in the IT and technology services business and high concentration of business in the Middle East which need to be priced in, but overall I am more positive on the stock than before given the management outlook of FY26.”
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For context, at the beginning of FY25, the company had indicated international and domestic prospects of about ₹7 trillion each.
“I think there is a momentum in the international market at the moment. We think the momentum will continue,” said R. Shankar Raman, president, whole-time director and CFO of L&T.
“We do think FY26 will also have certain tilt towards international orders,” he said during a post-earnings media call on Thursday.
Shankar Raman said that L&T was not worried about the Indian government’s change in stance to focus on a consumption-led growth over infrastructure investment-led growth in the economy.
“We do believe that investments lead to employment generation, which leads to income generation and hence consumption. We continue to bet on the need for the government to step up on its infrastructure investment. We still think we are under-invested (in infrastructure),” he said.
In its latest budget, the Union government increased the income threshold for zero tax liability and rationalized the direct tax slabs to spur consumption. Meanwhile, the allocation of ₹11.21 trillion for capital expenditure, just a shade more than previous budget’s allocation of ₹11.11 trillion, left core sector companies wanting for more.
Record year
L&T’s diversification to international business helped it end FY25 on a high with a profit of ₹5,497 crore for the fourth fiscal quarter, 25% more than the previous year. Revenue for the quarter was 11% higher year-on-year (y-o-y) at ₹74,392 crore.
About 70% of the orders that the company received during the quarter were from overseas.
The company ended the quarter with an order book of ₹5.79 trillion, which was 22% higher than last year. Just under half of the company’s consolidated order book is comprised of international business now.
For the full fiscal year, the company reported a consolidated profit of ₹15,037 on a consolidated top line of ₹2.56 trillion. The figures were 15% and 16% higher, y-o-y. L&T has given a revenue growth guidance 15% in FY26. It has upped its margin guidance to 8.5% compared to the 8.3% recorded in FY25.
While the company is confident of maintaining its growth rate in the new fiscal, it has cautioned that geopolitical crises need to be watched out for.
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“The risks to growth remain largely external–rising cross border tariffs, disrupted supply chains and continuing geopolitical stresses. The country will have to adapt to the rapidly evolving global landscape while harnessing its domestic strengths to drive growth in a sustainable manner,” a press statement from L&T read.
The company declared a dividend of ₹34 per share, leading to a payout of ₹4,675 crore.
The L&T stock closed marginally lower at ₹3,320.6 on the BSE on Thursday compared to a 0.51% decline benchmark Sensex. The stock has fallen by a tenth since the beginning of the year compared to a 2.33% rise in Sensex. Thursday’s earnings were declared after market hours.
