Government’s capex push and L&T’s engineering prowess prove a winning formula

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₹1.84 trillion in FY23. The consolidated order book is at ₹8.8 trillion, led by large hydrocarbon-related projects abroad and strong capex from the industrial sector as well as GCC-related projects. The International business is growing at more than 24% year-on-year.

The book indicates there is clear revenue visibility for the next three years already. Overall order inflow continues to grow in the high teens (around 16-17% compounded). Core engineering and construction earnings could compound at 24% thanks to margin improvements, implying that profits may double between FY23 and FY26.

This is commendable for a huge, capital-intensive company. The drivers of this are capex recovery in the private sector and central government policy, which has pushed for investments in infrastructure across sectors such as water, urban infra, T&D, railways, defence, and renewable energy. Assuming the recent assembly election results signal policy continuity, these investments should continue to flow.

In the Middle East, L&T is picking up orders in the hydrocarbon industry, in T&D and in urban infra spaces. Energy transition is also a source of opportunities. While L&T has investments in thermal power, it has also invested in the green-hydrogen supply chain, and in electrolysers and data centres, in line with a strategic growth plan it calls Lakshya 2026.

It has a memorandum of understanding (MoU) with Norway’s HydrogenPro to set up a joint venture for gigawatt-scale manufacturing of electrolysers for green hydrogen. A second MoU is with Norway’s H2Carrier to develop green ammonia. L&T’s presence across the heavy-engineering space has similarities with Korean chaebols (large industrial conglomerates run and controlled by an individual or