Brokerages Expect Mixed Quarterly Performance Despite Robust Order Book; Margin Pressure and Management Commentary to Remain Key Focus Areas

India's engineering and infrastructure major Larsen & Toubro (L&T) is expected to report a mixed set of financial results for the April–June quarter (Q1 FY27), with analysts forecasting modest revenue growth but healthy profit expansion. The company's performance is likely to reflect the impact of execution delays in West Asia, rising logistics costs and higher input expenses, even as its diversified business model and strong order pipeline continue to provide long-term support.

While domestic infrastructure activity remains healthy, temporary disruptions in overseas projects due to geopolitical tensions in West Asia are expected to limit top-line growth during the quarter. Investors will also closely monitor the management's outlook on project execution, order inflows and margin trends for the remainder of FY27.

West Asia Disruptions Expected to Slow Revenue Growth

West Asia has emerged as one of L&T's most important growth markets over the past few years. The region currently contributes around 33% of the company's consolidated revenue and accounts for nearly 37% of its total order backlog.

However, military tensions between the United States and Iran during the quarter disrupted logistics networks, increased freight costs and pushed up insurance premiums for ongoing projects. Although the company has previously indicated that construction activities largely continued using existing inventories, execution timelines are expected to have been affected.

As a result, analysts believe the company's Engineering, Procurement and Construction (EPC) business could report only modest growth despite healthy demand.

Revenue Likely to Remain in Single Digits

Most brokerages expect L&T's consolidated revenue to grow in the low single digits on a year-on-year basis.

The slower pace is primarily attributed to:

• Temporary execution delays in overseas projects.

• Limited recovery in domestic water infrastructure projects.

• Higher logistics and transportation costs.

• Elevated raw material and insurance expenses.

• Seasonal moderation compared to the previous quarter.

Despite these challenges, analysts believe L&T's diversified presence across infrastructure, hydrocarbon, defence, power transmission, heavy engineering and technology services should help cushion the impact.

Profit Expected to Grow Despite Margin Pressure

Although operating profitability is expected to remain under pressure, lower financing costs, better project mix and stable execution are likely to support net profit growth.

Brokerages estimate that adjusted net profit could rise by around 6–13% year-on-year, reflecting the company's ability to maintain earnings despite a challenging operating environment.

However, EBITDA margins are expected to remain under pressure because of higher execution costs and elevated input prices.

Brokerage Expectations

Motilal Oswal Financial Services

Motilal Oswal expects L&T to report relatively flat quarterly performance.

Estimated Q1 FY27 Performance

• Revenue: ₹64,335 crore (up around 1% YoY)

• Net Profit: ₹3,835 crore (up approximately 6% YoY)

• EBITDA: ₹6,250 crore

According to the brokerage, operating performance may soften during the quarter as geopolitical disruptions and higher execution costs affect margins. Nevertheless, the brokerage has retained its 'Buy' rating, citing L&T's long-term growth visibility and robust order pipeline.

Kotak Institutional Equities

Kotak Institutional Equities is relatively more optimistic on the company's revenue outlook.

Estimated Q1 FY27 Performance

• Revenue: ₹69,500 crore (up 9.1% YoY)

• Adjusted Net Profit: Up 12.6% YoY

• EBITDA: ₹6,746 crore (up 6.8% YoY)

Kotak believes ongoing projects in West Asia continued using existing inventories, limiting the disruption caused by geopolitical tensions. However, the brokerage also expects a sequential decline in revenue and EBITDA because of normal business seasonality.

Margin Outlook Remains the Biggest Concern

The key challenge for L&T this quarter is expected to be operating margins.

Several factors could impact profitability:

• Higher freight and logistics costs.

• Rising insurance premiums for overseas projects.

• Inflation in construction inputs.

• Delayed execution in select international projects.

• Limited contribution from some domestic businesses.

Investors will therefore closely analyse management commentary regarding cost control measures and margin recovery in the coming quarters.

Order Book Continues to Provide Long-Term Comfort

Despite near-term operational challenges, L&T continues to maintain one of the strongest order books in India's capital goods and infrastructure sector.

The company remains well-positioned to benefit from:

• Government-led infrastructure spending.

• Urban development projects.

• Renewable energy investments.

• Defence manufacturing opportunities.

• Industrial capex recovery.

• International hydrocarbon and energy projects.

A healthy order backlog provides strong revenue visibility over the next several years and remains one of the company's biggest strengths.

What Investors Should Watch

Apart from the headline numbers, market participants will closely monitor:

• Fresh order inflows during the quarter.

• Management's outlook on West Asia operations.

• Domestic infrastructure execution.

• Margin guidance for FY27.

• Working capital and cash flow trends.

• Capital expenditure plans.

• Outlook on private sector investments.

Positive commentary in these areas could have a greater impact on the stock than the quarterly earnings themselves.

Stock Performance Ahead of Results

Ahead of its earnings announcement, L&T shares traded higher, reflecting investor confidence in the company's long-term fundamentals. Market participants continue to view L&T as one of India's strongest infrastructure and engineering companies, supported by its diversified business portfolio and execution capabilities.

However, given the premium valuation of the stock, investors will expect the company to demonstrate sustained earnings growth and stable margins despite the challenging global environment.