L&T Q3 preview: Net profit and revenue to continue growth trajectory on the back of a strong orderbook

The most optimistic of the brokerages is Motilal Oswal, which estimates, the net profit to increase 11.9 percent YoY to Rs 3800 crore. The most pessimistic is IIFL, which expects the company to report a 0.85 percent YoY

Analysts expect Larsen and Toubro (L&T) to continue its strong growth trajectory thanks to a growing orderbook and execution of large projects. The company is expected to announce its Q3FY25 results on January 30.

According to the average of a Moneycontrol poll of six brokerages, the revenue of the engineering, procurement, and construction (EPC) major is likely to  increase nearly 18 percent year-on-year (YoY) to Rs 65,065 crore, up from Rs 55,128 crore in the previous fiscal. Net profit is expected to increase around 24 percent YoY from Rs 2,947 crore.

The most optimistic of the brokerages is Motilal Oswal, which estimates net profit to increase to Rs 3,800 crore.

What will drive the earnings

Strong orderbook Most brokerages expect L&T to see strong order inflows, driven by big wins in defence and power during the quarter. Analysts at Nuvama note that L&T is on track to meet its FY25 order growth guidance of 10 percent YoY.

Additionally, "a strong existing orderbook in 1HFY25, coupled with rising execution levels post monsoons and elections places L&T comfortably to deliver strong revenue growth," the brokerage says. In a December 2024 note, analysts at Philips Capital had also noted that L&T has seen strong order execution; even the election and summer-led slowdown in Q1FY25 did not dim its execution, which was offset by strong growth in its international business.

Revenue growth across segments

Analysts at IIFL Securities expect the EPC major to report strong growth across segments. For Q3FY25, revenue (ex-services) is expected to grow 21 percent YoY, led by 19 percent on-year growth in infra, and 20 percent  in defence engineering. The hydrocarbon business is expected to see a 15 percent YoY revenue growth. 

EBIDTA margin to grow

Analysts at Motilal Oswal expect the core E&C (engineering and construction) EBITDA margin to grow 40 basis points (bps) YoY to 8.1 percent.  But analysts at Nuvama note that with robust order growth, completion of legacy projects, refinancing of the Hyderbad metro, etc., margins may ramp up, but at a slower pace.

Execution uptick in the Middle East

Most brokerages remain optimistic that continued execution of large projects in the Middle East — a key market  —  will boost earnings for the company.

What to look for in the quarterly results?

Analysts will be keeping a watch on the domestic order pipeline, global expansion across segments, margin performance, as well as the working capital cycle.