Larsen & Toubro Shares Jump 6% on Strong Q2 Earnings and Order Growth

Larsen & Toubro (L&T), one of India's leading infrastructure and engineering companies, experienced a significant surge in its stock price on Wednesday. Shares climbed by 6 per cent to ₹3,892 during intraday trading on the Bombay Stock Exchange (BSE), marking the steepest intraday rise for the company in the last six months. This jump followed the release of its quarterly financial results for the period ending September 2026 (Q2FY27), which were well-received by investors.

At 09:23 AM, L&T’s shares were trading approximately 5 per cent higher at ₹3,845, while the broader BSE Sensex was down by 0.95 per cent. Trading volumes were robust, with a combined total of 1.4 million shares exchanging hands across the National Stock Exchange (NSE) and BSE.

The infrastructure major reported a consolidated profit after tax (PAT) of ₹5,202 crore for Q2FY27, representing an impressive 33 per cent increase compared to ₹3,926 crore in the same quarter last fiscal year. Revenue for the quarter also grew strongly, rising 16 per cent year-on-year to ₹78,750 crore. This increase was primarily driven by progress across several segments within L&T’s Projects, Products & Manufacturing (PPM) portfolio.

Operating earnings before interest, tax, depreciation and amortization (EBITDA) saw a marginal year-on-year growth of 0.6 per cent, reaching ₹6,845 crore. However, the EBITDA margin, excluding other income, contracted by 130 basis points to 8.7 per cent from 10.0 per cent in the previous year. The margin shrinkage was attributed to a higher proportion of revenue coming from the PPM segment, which typically has lower margins, as well as cost pressures in areas such as Water & Effluent Treatment and increased supply chain expenses.

L&T also announced a robust order inflow during the quarter, securing contracts worth ₹1.48 trillion. This reflected a 28 per cent increase over the same period last year. Notable orders were won in Hydrocarbon, CarbonLite Solutions, Public Spaces & Airports, and Power Transmission & Distribution sectors. The consolidated order book stood at ₹8.5 trillion at the end of September 2026, growing 15 per cent compared to March 2026. More than half of these orders, 54 per cent, were from international projects.

Brokerage analyses highlighted L&T’s strong execution capabilities despite a challenging geopolitical environment, especially in the Middle East, where Hydrocarbon projects continue to perform well. The Energy Conventional segment also secured several high-value offshore and onshore contracts, including those related to CarbonLite technologies. While the EBITDA margin contraction raised some caution, analysts noted that the margin impact was largely due to the business mix and temporary factors such as projects yet to cross profitability recognition thresholds.

Management reaffirmed its financial guidance for FY27, targeting order inflow growth and revenue growth in the range of 10-12 per cent. The PPM EBITDA margin is expected to be around 7.8 per cent. Additionally, the company reported an improved net working capital (NWC) to revenue ratio at a record low of 1.7 per cent, indicating better working capital management. The near-term project pipeline remains healthy, with opportunities worth approximately ₹10.3 trillion for the remainder of the fiscal year.

Motilal Oswal Financial Services echoed these positive sentiments, maintaining a 'Buy' rating on L&T. They cited the company's historical order win rate of over 20 per cent, a prospect pipeline of ₹10 trillion, and strong inflows in the first half of FY27 as reasons for confidence in meeting annual targets. Despite supply chain challenges, execution momentum has accelerated, supporting expectations for sustained revenue growth. The brokerage assigned a target price of ₹4,400 based on a sum-of-the-parts valuation as of December 2028 estimates.

Larsen & Toubro operates across multiple sectors including infrastructure, power, heavy engineering, and manufacturing. It plays a crucial role in India's ongoing infrastructure development and energy investments. The company's financial performance and order book strength position it well to navigate near-term uncertainties and capitalize on long-term growth opportunities.