The management of Larsen & Toubro (L&T) on May 8 said that there are opportunities worth Rs 19 trillion from project orders that the company will look to bid for in the ongoing financial year 2025-26.
"Based on our initial estimate, the prospect pipeline for L&T adds up to close to Rs 7 lakh crores (Rs 7 trillion) for domestic business and Rs 12 lakh crores (Rs 12 trillion) for international business." L&T's Chief Financial Officer R Shankar Raman said.
R Shankar Raman, while speaking at the company's post Q4FY25 earnings conference call, said that around 64 percent of the prospective order pipeline of Rs 19 trillion will come from international projects. He added that on the back of a successful year in 2024-25, the next 12 months looks encouraging for L&T to aspire to grow on the large base of order inflows by around 10 percent in FY26. L&T's management also guided for a revenue growth of 15 percent on year in FY26 while maintaining core operating margins at 8.3 percent in the current financial year.
The consolidated order book of the L&T group stood at Rs 579,137 crore as on March 31, 2025, with international orders having a share of 46 percent, L&T said. The order book of Rs 579,137 crore represents a growth of 22 percent over Rs 4,75,809 as on March 31, 2024 and Rs 3,99,526 as on March 31, 2023 and Rs 357,595 crore as on March 31, 2022.
L&T won new orders worth Rs 3,56,631 crore in FY25, which is 18 percent higher that the orders worth Rs 3,02,812 crore the company won in FY24.
Shankar Raman added that Qatar, Saudi Arabi, the United Arab Emirates and Kuwait are key international markets for L&T interms of order inflow. He added that in FY25 L&T won orders worth Rs 60,000 crore from the Saudi Arabian market, which made by 25 percent of all L&T's international orders.
L&T's CFO explained that the company had eyed a prospective order pipeline of Rs 7 lakh crore from the Indian domestic market and Rs 7 lakh crore from the international market at the start of FY25. He added that the higher prospective order pipeline from the international market was mainly due to higher capital expenditure currently being done by the government of Saudi Arabia and the UAE.
"This is a general belief that lower oil prices means lesser investments. I think we should bear in mind the Middle East thinking around this entire area," Shankar Raman said explaining that countries in the West Asia are looking to utilize their oil and gas resources to create capital that is being used to make investments in the field of renewable energy.
He added that L&T currently works in many more industries including infrastructure, renewable energy, oil and & gas in 2025 when compared to its area of operations 10 years ago, which create a bigger order perspective pipeline for the company.
Shankar Raman also said that L&T has so far not assessed the impact the ongoing geopolitical conflict between India and Pakistan on domestic order inflows. He added L&T is in a state of 'technological preparedness' and its R&D efforts including prototype manufacturing, are in the context of what the country would need.
Speaking about L&T's operating margins, Shankar Raman explained that L&T's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins declined to 10.3 percent in FY25 from 10.6 percent mainly due to a fall in the company's EBITDA margin for IT & Technology Services segment.
"This decline (fall in the EBITDA margins of L&T's IT segment) is largely due to lower operating leverage caused by the slower revenue growth of the segment," Shankar Raman said.
He added that L&T is working to improve its operating margins in FY26 and said that in FY25 LTIMindtree won four contracts worth $ 100 million and L&T Technology Services (LTTS) won four contracts worth $ 50 million. These new contracts will help L&T improve margins from its IT & Technology Services segment, Shankar Raman said.
Shankar Raman also said that the fall in the margins seen in L&T's energy segment is cyclic in nature based on the contracts and is likely to improve once a few of the company's energy contracts reach 25 percent completion.
Speaking about L&T's thermal power operations the company's management said that L&T will not get into thermal power consumption or get into Engineering, Procurement, and Construction (EPC) for thermal power plants and will rather focus on manufacturing boiler and turbine packages.
"We do think that there will be opportunities for us to be competitive in boiler and turbine packages. And maybe the NTPCs and the state utilities could be the potential customers," Shankar Raman said.
He also said that L&T will explore expansion of its Nabha Power thermal facility under favorable conditions.
"If the conditions so warrant and a state electricity board either offers the compensation which makes the investment worthwhile or provides flexibility for us to sell on merchant power basis and the price of merchant power is attractive, then the investment will happen," Shankar Raman said.
L&T's management also said that its semiconductor business will also be a global business.
"As we design chips, it will be used for Japanese market, European market, US market," Shankar Raman said.
L&T Semiconductor Technologies (LTSCT) is planning to build three semiconductor fabs in India over the next five to 10 years with potential investments of $10-12 billion, as the L&T group’s newest business vertical aims to become a multinational semiconductor player. The investment is contingent upon the company achieving $ 1 billion in annual revenue by 2026-27 through its proprietary chip designs and semiconductor products.
The company intends to focus on designing and patenting its own chips while outsourcing manufacturing to third-party foundries. This hybrid model allows LTSCT to retain control over its intellectual property while leveraging external expertise for the production process.
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