Larsen & Toubro Ltd Q1 FY27 Results Analysis: Order Inflow Jumps 14.4%, Margin Compresses 92 bps

Larsen & Toubro Ltd's Q1 FY27 numbers came in mixed, with revenue of Rs. 67,941.74 Cr (+6.69% YoY) and PAT growth of +13.98% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

L&T reported Q1 order inflow of Rs.1,08,014 cr, +14.4% YoY, ahead of its FY27 growth target of 10-12%. Revenue grew 6.7% YoY, but EBITDA margin contracted 92 bps to 9.0% due to cost pressures. PAT grew 14% YoY aided by higher other income and lower finance costs. The strong order book provides revenue visibility, but margin compression and supply-chain disruptions in the solar business are watchpoints.

Key Investment Insights

Key Positives

• Order inflow grew 14.4% YoY to Rs.1,08,014 cr, ahead of the FY27 target of 10-12%.
• Order book stood at Rs.7,78,954 cr, up 5% vs Mar 2026, providing revenue visibility of ~2.7x FY26 revenue.
• PAT attributable to owners grew 14% YoY to Rs.4,123 cr, aided by lower finance costs and higher other income.
• Debt-equity ratio improved to 1.01 from 1.13 a year ago.
• Interest service coverage ratio improved to 11.42x from 7.15x a year ago.
• Debtors turnover improved to 4.49x from 4.40x, indicating better collection efficiency.

Risk Factors

• EBITDA margin contracted 92 bps YoY to 9.0% due to employee cost and SGA pressure.
• Employee costs grew 11.1% YoY, outpacing revenue growth of 6.7%.
• Sales, admin & other expenses surged 45.4% YoY to Rs.4,051 cr, representing 5.96% of revenue vs 4.37% a year ago.
• Energy - Green revenue declined 11.5% YoY due to supply-chain disruptions in the Solar business.
• Infrastructure & Utilities revenue declined 2.4% YoY due to execution challenges in Water & Effluent Treatment.
• Effective tax rate rose 184 bps to 28.02%, absorbing additional tax on incremental PBT.