L&T Q3 FY25 Results: Net Profit Rises 14%, Misses Street Estimates and Strong Order Book
Larsen & Toubro Ltd: Overview
Larsen & Toubro Ltd. (L&T) is one of India’s largest engineering, procurement, and construction (EPC) companies, with a diversified portfolio spanning infrastructure, hydrocarbon, power, defense, and technology services. The company has a strong presence in domestic and international markets, particularly in the Middle East, Africa, and South Asia. The Indian government’s focus on infrastructure development, including roads, railways, smart cities, and renewable energy, provides significant growth opportunities for L&T. The company is also benefiting from rising investments in energy transition, water management, and digital transformation. However, challenges such as global supply chain disruptions, rising commodity prices, and geopolitical uncertainties may impact operational efficiencies and profitability. L&T operates in power transmission, distribution, and heavy engineering solutions, catering to sectors such as nuclear energy, aerospace, and defense. With India investing ₹111 lakh crore under the National Infrastructure Pipeline, construction and engineering firms like L&T are set to see strong demand. The company manufactures critical components for nuclear reactors, thermal power plants, and space missions, positioning itself as a key player in India’s self-reliance initiatives in defense and energy security. The company benefits from India’s rapid urbanization, industrial growth, and government initiatives focused on infrastructure development, digital transformation, and sustainability.
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Larsen & Toubro Ltd. achieved its highest-ever order inflow in a quarter, driven by large orders across Infrastructure, Energy, and Hi-Tech Manufacturing segments. International orders contributed 42% of the December 2024 order book, while the company maintains a robust order prospects pipeline of ₹5.5 trillion in the near term, with domestic opportunities constituting 59%. Revenue growth was fueled by strong execution momentum in Infrastructure (15% YoY), Hydrocarbon (54% YoY), and Precision Engineering & Systems (34% YoY). The increase in MCO expenses reflects higher activity levels and revenue mix, particularly from P&M revenue. Staff costs rose due to resource expansion and salary hikes, while SG&A variations were linked to the execution ramp-up. EBITDA margins reflected the revenue mix and lower operating leverage in the IT&TS segment. Finance costs declined due to lower borrowing levels and rates, while depreciation increased due to higher P&M-related capex and new premises capitalization in LTIMindtree. Other income was influenced by investment levels and yields earned. The reported PAT growth was a result of increased business activity and improved treasury operations. In the Infrastructure segment, international order momentum remained strong, with a near-term prospect pipeline of ₹4.0 trillion. Execution remained robust, backed by a large order book and stable margins. The Manufacturing segment saw strong execution in Precision Engineering & Systems (PES), while revenue in Heavy Engineering was subdued due to jobs in the early stages. However, execution cost savings in Heavy Engineering aided margin improvement. In IT services, LTIMindtree’s revenue growth was led by the Technology, Media & Communications, and BFSI segments. LTTS saw growth in its Tech and Sustainability verticals. However, segment margins declined due to salary hikes and forex losses in both LTIMindtree and LTTS.
Business Segments
- Infrastructure: It comprises engineering and construction of buildings and factories, transportation infra, heavy civil infra, power transmission & distribution, water & effluent treatment, smart world & comm. projects and metallurgical & material handling systems. This is the core business of the company. Major projects include high-speed rail corridors, metro projects in key Indian cities, and international projects in the UAE and Saudi Arabia.
- Coal Supply and Distribution: It comprises complete EPC solutions for the global oil & gas industry from design through detailed engineering, fabrication, procurement, project management, construction, installation, and commissioning. The segment has secured significant contracts in the Middle East and Africa, reinforcing its international presence.
- Financial Services: This business primarily comprises rural finance, housing finance, wholesale finance, mutual fund, and wealth management. The business is controlled by the company’s subsidiary L&T Finance Holdings Ltd. With India’s economic growth boosting credit demand, L&T Finance is well-positioned for steady growth despite regulatory challenges and interest rate fluctuations.
- Defence Engineering: This segment comprises design, development, serial production, and life-support of equipment, systems, and platforms for defense and aerospace sectors; and the design, construction, and repair/ refit of defense vessels. The company has been active in the defense and strategic sector since the mid-80s.
Subsidiary Information
- L&T Infotech (LTI): LTI is a global technology consulting and IT services provider, specializing in cloud computing, data analytics, and automation. It has a strong client base across banking, financial services, manufacturing, and healthcare, contributing significantly to L&T’s digital transformation initiatives.
- L&T Construction: This subsidiary is a key player in India’s infrastructure sector, executing large-scale projects in transportation, water management, and smart cities. It is engaged in metro rail construction, high-speed rail, and expressways, enhancing urban mobility and connectivity.
- L&T Hydrocarbon Engineering (LTHE): LTHE focuses on the hydrocarbon sector, offering engineering and construction services for refineries, petrochemicals, and oil & gas projects. It has a strong presence in the Middle East and has secured contracts for offshore platforms and onshore processing units.
- L&T Finance Holdings: This subsidiary provides retail and corporate financing solutions, including home loans, vehicle finance, and infrastructure funding. It is streamlining its operations to focus on high-growth areas such as renewable energy financing and micro-lending.
- L&T Heavy Engineering: L&T Heavy Engineering manufactures specialized equipment for nuclear power, defense, aerospace, and industrial applications. It is a key supplier to India’s space and defense programs, providing critical components for missile systems, submarines, and space exploration missions.
Q3 FY25 Earnings
- Revenue of ₹64668 crore in Q3 FY25 up by 17.3% YoY from ₹55128 crore in Q3 FY24.
- EBITDA of ₹7898 crore in this quarter at a margin of 12% compared to 13% in Q3 FY24.
- Profit of ₹3974 crore in this quarter compared to a ₹3593 crore profit in Q3 FY24.
Financial Summary
| Amount in ₹ Cr | Q3 FY24 | Q3 FY25 | FY23 | FY24 |
| Revenue | 55128 | 64668 | 183341 | 221113 |
| Expenses | 47929 | 56770 | 156175 | 191248 |
| EBITDA | 7199 | 7898 | 27166 | 29865 |
| OPM | 13% | 12% | 15% | 14% |
| Other Income | 838 | 968 | 2891 | 3847 |
| Net Profit | 3593 | 3974 | 12531 | 15547 |
| NPM | 6.5% | 6.1% | 6.8% | 7.1% |
| EPS | 21.4 | 24.4 | 74.5 | 95 |