Strong Order Flows to Drive L&T Q2 Earnings; Margins May Stay Under Pressure

L&T Set to Announce Q2FY26 Results on October 29

Engineering and construction major Larsen & Toubro (L&T) will declare its Q2FY26 financial results on October 29, with analysts expecting a strong performance driven by robust order inflows, healthy execution, and a diversified project pipeline.

Despite the expected rise in earnings, analysts believe margin expansion may remain limited, as a mixed project mix and cost pressures could offset gains from higher revenue. Investors will be closely watching the company’s commentary on domestic order momentum, international project conversion, and policy-led infrastructure spending.

Strong Revenue and Profit Growth Expected in Q2FY26

Market estimates indicate that L&T’s consolidated revenue may rise around 15% year-on-year (YoY) to nearly ₹70,818 crore in Q2FY26. Analysts project profit after tax (PAT) to grow by 17.5% YoY to about ₹3,990 crore, supported by higher execution across infrastructure and hydrocarbon projects.

Brokerages differ slightly in their forecasts. HDFC Securities holds the most optimistic view, projecting a PAT of ₹4,200 crore, while B&K Securities expects a lower figure at ₹3,642 crore. Other brokerages have placed their revenue expectations between ₹68,763 crore and ₹71,913 crore, with EBITDA margins seen holding steady around 9.8%–10.4%.

Analysts believe that strong execution of large projects and steady contribution from the EPC (Engineering, Procurement, and Construction) segment will anchor the company’s performance this quarter.

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Order Momentum Remains Strong Across Segments

L&T’s Q2FY26 performance is likely to be driven by strong order inflows both in domestic and overseas markets. Brokerage firm Nuvama highlighted that L&T secured several large-ticket orders across heavy civil infrastructure, power transmission & distribution, water systems, hydrocarbon, battery energy storage systems (BESS), and the Mumbai–Ahmedabad bullet train project.

On the international side, projects in the Middle East and GCC region are expected to remain key revenue drivers. Nomura projects core order inflows of ₹67,750 crore for the quarter, reflecting L&T’s growing global footprint and strong execution pipeline.

Timely execution of these large projects—especially in the hydrocarbon and infrastructure verticals—will be crucial for sustaining revenue momentum through FY26.

Margins Expected to Stay Flat Amid Mixed Project Mix

While topline growth appears solid, margin expansion may remain constrained. Analysts expect L&T’s core Engineering & Construction (E&C) margins to be steady, with some brokerage houses projecting a marginal improvement depending on project contribution.

According to Motilal Oswal Financial Services (MOFSL), core E&C EBITDA margins are likely to stay at 7.6% YoY, implying that consolidated profitability could see a minor 50 bps decline. Conversely, Kotak Institutional Equities forecasts a slight improvement to 8%, supported by higher hydrocarbon project contribution.

However, experts caution that mega-hydrocarbon projects—though positive for topline growth—may not be immediately margin-accretive, given their complex execution and cost structure.

Project Mix and Execution Strategy Key to Sustained Growth

The composition of L&T’s project portfolio remains a major determinant of near-term performance. The company’s strategic focus on diversified sectors such as hydrocarbons, infrastructure, and international EPC markets is expected to support long-term growth and profitability.

Kotak Securities highlighted that a greater share of hydrocarbon revenues could eventually aid margin recovery, while MOFSL emphasized the execution ramp-up in Saudi Arabia and GCC as a key driver for upcoming quarters.

Meanwhile, Nomura noted that ultra-mega orders in the hydrocarbon segment ensure strong visibility for future revenue but might temporarily impact near-term profitability due to higher initial costs.

What Investors Will Be Watching in L&T Q2FY26 Results

As L&T unveils its second-quarter numbers, market participants will monitor several key aspects:

• Order inflow trends: Progress on domestic and international project awards.

• Public capex outlook: Management commentary on infrastructure spending by the government.

• International execution: Updates on GCC and Middle East projects’ progress.

• Margin guidance: The company’s take on cost management and profitability amid inflationary pressures.

• Policy developments: Insights into sector-specific reforms in defense, power, and infrastructure.

Outlook: Strong Execution and Order Book Support Long-Term Growth

L&T continues to solidify its position as India’s leading engineering and construction player, benefiting from robust infrastructure spending and international project opportunities. The company’s order book visibility and steady execution pace are expected to support double-digit revenue growth in the near term.

While margins may remain stable for now, analysts believe operating leverage and cost efficiencies could drive incremental improvement in the second half of FY26. With India’s infrastructure momentum intact and global demand picking up, L&T appears well-positioned for sustainable growth in both domestic and international markets.

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