L&T’s orders soothe, but margin irks

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Subscribe to enjoy similar stories. Larsen & Toubro Ltd’s (L&T) shares fell 3% on Saturday, pretty much wiping away the gains it saw the previous day in reaction to the December quarter results (Q3FY25). Positives of Q3 aside, some part of the stock upmove was in anticipation that capital expenditure (capex) allotment could be higher in budget 2025.

But a modest uptick in FY26 capex has upset investors. L&T is considered as a proxy to the country’s infrastructure developments as government orders form a huge chunk of its order book. Nonetheless, the company is bracing for a robust March quarter (Q4) as it is well-placed in four-five large orders, amounting to ₹50,000 crore and some or all of these may get finalized quarter, the management said in Q3 earnings call.

The order inflow ask-rate for Q4 is ₹65,000 crore, it added. Of course, timely execution is a crucial variable here. L&T is confident of surpassing its FY25 year-on-year order inflow and revenue growth guidance of 10% and 15%, respectively.

“With robust momentum in inflows, receiving 90% of last year inflows in 9MFY25, along with a healthy pipeline of ₹5.5 trillion for the next three months, we factor in 13.9% growth in inflows in FY25E," said an Elara Securities (India) report dated 31 January. Order book at ₹5.64 trillion provides a book-to-bill visibility of 3.2x, it added. Order inflows for L&T’s core projects & manufacturing (P&M) business surged 64% year-on-year, hitting a record ₹98,700 crore in Q3, led by two ultra-mega orders win.

Domestic orders were at 48% of the inflow mix, while international was 52%. International orders have done the heavy-lifting for L&T lately. Within international, a large chunk continues to come from the Middle East where