Larsen & Toubro’s consolidated order book reached a record ₹7.79 trillion, supported by strong international project wins. While global projects now make up over half of the backlog, the company is managing near-term profit margin pressure caused by supply chain delays and higher operating costs. Investors are tracking how these execution challenges impact profitability in the coming quarters.
Larsen & Toubro continues to see strong demand for its engineering and construction services, with its consolidated order book climbing to a record ₹7.79 trillion. This represents a significant 27% increase compared to the previous year, highlighting the company's ability to secure large-scale contracts despite global economic uncertainty. A major contributor to this growth is the company's international expansion, with overseas projects now accounting for approximately 52% of the total backlog.
Impact of Margin Pressure
Despite the growth in orders, the company has faced challenges regarding its profit margins. Recent data indicates a 90 basis point contraction in EBITDA margins, which settled at 9.0%. This pressure is largely linked to the Projects, Products, and Manufacturing segment, where execution has been slower than anticipated. Factors such as supply chain disruptions, particularly those stemming from conflicts in the Middle East, have created logistical hurdles. Additionally, the company has had to account for higher provisions and foreign exchange challenges within its technology services division, which have weighed on overall profitability.
Execution and Future Outlook
Management remains focused on the 'Lakshya 2031' strategy, which emphasizes disciplined capital spending and a shift toward higher-value international projects, such as large-scale offshore wind energy developments in Europe. The company reported a 14% year-on-year rise in order inflows, reaching ₹1.08 trillion. While execution in areas like infrastructure and utilities faced regional logistical constraints in the GCC, other segments like precision engineering and construction equipment continue to perform steadily.
Looking ahead, the company has maintained its guidance for 10% to 12% revenue growth for the current fiscal year. Investors will be closely watching whether improvements in project execution during the second half of the year can help stabilize margins. The ability of the company to convert its massive order book into actual revenue, while managing raw material costs and global supply chain risks, remains the primary factor for future financial health.