L&T Q3 Preview: Profit May Jump by a Third Amid Middle East Order Concerns
L&T is expected to report strong Q3 FY26 results with revenue estimated at ₹74,875 crore (16% YoY growth) and profit projected at ₹4,346 crore (~33% growth). However, investor focus will be on order inflow sustainability amid Middle East concerns, including potential Kuwait project cancellations worth $4.5 billion and moderating Saudi construction growth. The company's domestic private capex momentum, European market entry, and defence manufacturing partnerships will be key discussion points.
*this image is generated using AI for illustrative purposes only.
Larsen & Toubro is poised to deliver robust financial results for the October-December quarter, with profit expected to surge by nearly a third. However, investor attention will be firmly fixed on whether the engineering giant can sustain its strong order inflow momentum, particularly amid emerging concerns about Middle East business prospects.
Financial Performance Outlook
The Mumbai-headquartered company's Q3 FY26 financials are expected to demonstrate strong growth across key metrics. According to consensus estimates from four brokerages including HDFC Securities, JM Financial, Motilal Oswal, and Nuvama, the company is well-positioned for significant year-on-year improvements.
| Financial Metric | Q3 FY26 (Estimated) | Growth (YoY) |
|---|---|---|
| Consolidated Revenue | ₹74,875 crore | 16% |
| Net Profit | ₹4,346 crore | ~33% |
| EBITDA | ₹7,659 crore | >20% |
Middle East Order Challenges
Despite strong financial projections, clouds are gathering over L&T's Middle East operations. Kuwait is considering cancellation of oil & gas sector tenders worth $8.7 billion due to high budget estimates, with L&T being the lowest bidder for $4.5 billion of these orders. While these orders were not yet part of the company's record ₹6.67 trillion order book as of September, they formed part of the quantified order pipeline of ₹10.4 trillion.
JM Financial analysts noted on January 13 that while some cancelled orders may be retendered after project economics reassessment, delays in Kuwait project awards have prompted them to reduce core order inflow estimates for FY26-FY28 by 5-6%. Additionally, InCred Equities analysts highlighted concerns about Saudi Arabia, where construction industry growth may moderate from the current 24% compound annual rate to single digits, potentially impacting L&T significantly as the kingdom accounts for three-quarters of international infrastructure orders.
Domestic Private Sector Momentum
A key bright spot has been the resurgence of domestic private sector capital expenditure. L&T's infrastructure projects segment received domestic orders worth ₹27,400 crore during Q2, marking 50% growth compared to the previous year and the first time in five quarters that the segment crossed ₹20,000 crore in order inflows.
R. Shankar Raman, whole-time director and CFO, expressed optimism about the trend's continuation, stating that both private sector capital and infrastructure investments showed an uptick. However, he cautioned that while Q2 saw increased private sector order receipts, sustainability of this trend remains to be established.
Strategic Expansion and Diversification
L&T's entry into European markets represents a significant strategic milestone. The company secured its largest contract in the Netherlands in late October, involving high-voltage direct current converter stations for TenneT's offshore wind energy projects in collaboration with Hitachi Energy. This European breakthrough potentially opens vast new markets beyond the Middle East-concentrated overseas business.
| Strategic Initiative | Details |
|---|---|
| European Entry | HVDC converter stations project in Netherlands |
| Defence Partnership | Strategic alliance with BEL for AMCA programme (₹15,000 crore) |
| Drone Manufacturing | Collaboration with GA-ASI for 87 MALE drones |
Defence and Hi-Tech Manufacturing
The company's technological capabilities are expanding through strategic partnerships in defence manufacturing. L&T has joined forces with Bharat Electronics Ltd for the Advanced Multirole Combat Aircraft programme worth ₹15,000 crore to develop five prototypes, challenging Hindustan Aeronautics Ltd's market position. Additionally, the partnership with General Atomics Aeronautical Systems for manufacturing Medium Altitude Long Endurance drones in India represents significant long-term revenue potential.
Investors will be particularly interested in management commentary on order sustainability, domestic capex trends, European expansion plans, and progress in defence manufacturing capabilities when L&T announces its results.
Historical Stock Returns for L&T Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.95% | -3.76% | -6.01% | +33.60% | +103.85% | +218.00% |
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