Profit may jump by a third, but Middle East orders in focus
While the company’s revenue and profit in the October-December period are expected to grow in double digits on an annual basis, investors will be more keen to see whether the growth momentum seen in recent quarters in the company’s order inflows will continue, especially due to concerns about a slowdown in business from the Middle East.
Meanwhile, economists and markets will look at a more specific part of the order flow: domestic private sector capital spending. The Mumbai-based company announced in October that it had seen the first signs of the return of private sector capital expenditures in India and that its infrastructure projects segment had received domestic orders worth almost 200 million lira. ₹27,400 crore in the July-September quarter, 50% more than a year ago.
Investors will want to see whether the sharp increase in domestic orders in the previous quarter, which signaled a rebound in private investment spending, is a blip or the beginning of a permanent trend.
L&T’s quarterly financials are expected to be strong. Consolidated revenue is forecast to increase 16% year-on-year in the three months to December (Q3 FY26). ₹74,875 crore, according to the consensus estimate of analysts at four brokerage firms. These are HDFC Securities, JM Financial, Motila Oswal and Nuvama.
Profits are forecast to increase by around a third ₹4,346 crore. Earnings before interest, taxes, depreciation and amortization (EBIT) are expected to increase by more than a fifth ₹7,659 crore.
Beyond the headline-grabbing financial numbers, here are the key points to note from L&T’s earnings on Wednesday:
Order entries from Middle East, management view
L&T’s order book breaks record ₹6.67 trillion at the end of September and the company stated that it has an order pipeline so far. ₹10.4 trillion provides clear visibility of revenue growth in the short term. Received the highest quarterly order flow of the year ₹1.16 trillion in the quarter ending September 30, 2025.
The Street wants to see if the company can maintain this momentum.
There are a few clouds that could cast a shadow over this growth story. Kuwait, for example, is considering canceling $8.7 billion worth of tenders in the oil and gas sector, citing high budget estimates, according to media reports. Apart from this, L&T was the lowest bidder for orders worth $4.5 billion. While these were not yet part of the company’s order book, they were part of the company’s measured order pipeline. ₹10.4 trillion, according to analyst reports.
Analysts at JM Financial noted on January 13: “We have previously highlighted that L&T is well positioned for tenders worth $4.5 billion in Kuwait. We do not have full knowledge of L&T’s exposure to projects that could potentially be cancelled.” Analysts underlined that even if some orders are canceled, they can be re-tendered after the project economics are re-evaluated. However, this may cause delay in awarding projects in Kuwait, which may lead them to reduce their base order flow forecast for L&T by 5-6% for FY26-28.
Similarly, some early concerns are emerging regarding orders coming from Saudi Arabia, according to InCred Equities analysts. Orders from the kingdom may slow after FY27 due to slowing construction sector growth, analysts wrote in a Jan. 5 note. The Saudi construction industry grew at a compound annual rate of 24% between FY22-25. Analysts said this rate could fall to single digits, in line with the country’s gross domestic product (GDP) growth rate.
This could have a significant impact on L&T as Saudi Arabia accounts for three-quarters of the company’s international infrastructure orders.
Domestic private sector investment expenditures
L&T’s infrastructure projects segment gets domestic orders ₹27,400 crore in the second quarter, the first time the segment has crossed in five quarters ₹Order flow of 20,000 crore.
“We see both private sector capital and infrastructure investments on the rise. We believe the trend will continue to move forward,” said R. Shankar Raman, L&T’s full-time executive and chief financial officer, during a post-earnings media interaction. Regarding private sector expenditures, he said that although there was an increase in order revenues in the second quarter, it is not yet clear whether this will turn into a trend.
International diversification, expansion in Europe
L&T’s overseas operations are mainly concentrated in the Middle East, especially Saudi Arabia. But the company won its biggest contract in the Netherlands at the end of October, signaling its arrival in Europe and the opening of potentially vast markets.
Investors will want comments from management on whether the European setup is a one-off or whether they aim to expand into new geography and how profitable the margins will be.
The company has won a contract to develop high-voltage direct current (HVDC) converter stations that will integrate Dutch energy company TenneT’s offshore wind energy projects into the European grid. The project will be delivered in collaboration with Hitachi Energy, which will provide the equipment; L&T, on the other hand, will handle engineering, procurement and construction (EPC).
“L&T continues to drive long-term growth through major order wins (through) international diversification in the Middle East and now Europe, bidding for 5th generation fighter jets and UAVs (unmanned aerial vehicles or drones), and moving up the skills curve through traditional jobs (domestic buildings and factories and thermal power generation),” analysts at JP Morgan noted on November 3.
Defense, high-tech production
L&T and Bharat Electronics Ltd (BEL) have formed a strategic partnership to bid for the Advanced Multi-Role Combat Aircraft (AMCA) programme. ₹The 15,000-crore project aims to develop five prototypes. The partnership combines L&T’s engineering with BEL’s defense electronics to challenge the monopoly of Hindustan Aeronautics Ltd.
Larsen & Toubro and America’s General Atomics Aeronautical Systems (GA-ASI) have joined hands to manufacture Medium Altitude Long Endurance (MALE) remotely piloted aircraft systems (simply unmanned aircraft) in India for the Indian Armed Forces. L&T will be the main bidder for 87 MALE drones with GA-ASI providing technology transfer.
While the company has been a serious player in the defense sector for some time, these tenders expand its technological capabilities into new regions and offer significant long-term revenue potential. Investors will look for management commentary in this segment.
