There’s something deeply annoying about watching a stock do absolutely nothing while the business underneath it is breaking records. That’s exactly what Larsen & Toubro (L&T) has been for the last 18 months.
Flat on the charts. Almost zero returns. But inside the balance sheet? A quiet monster.
I’ve spent the last two weeks going through every earnings call transcript, investor deck, the FY24 annual report, and even one obscure page from their nuclear division’s capability brochure. I came out of it with one feeling:
We have no idea how big this company really is.
The Industrial Octopus We Ignored
Everyone thinks L&T is just bridges and metros. But this company is an octopus — spanning infrastructure, hydrocarbons, aerospace, defense, clean energy, and digital exports. It has skin in every game that will define India over the next decade.
As of Q3 FY25, Infra projects make up half the revenues. But 17% now comes from hydrocarbon EPC, and 19% from digital services (via LTIM and LTTS). Even defense and aerospace now contribute 4%.
FY25 Reality Check: Strong Execution, Weak Stock
Across the first 9 months of FY25, L&T delivered:
- ₹1.81 lakh Cr in revenue (↑18%)
- ₹9,600 Cr in PAT (↑10%)
- EBITDA margins of 10.1%
- ROE holding above 16%
- 50% of revenue from international markets
- ₹1.16 lakh Cr in Q3 inflows (record!)
- Total order book now at ₹5.64 lakh Cr
What more do you want from a company? And still, the market shrugs.
Margins Dropped. But Look Deeper.
Yes, EBITDA margins dipped to 9.7% in Q3. But that was because execution picked up across complex infra and defense contracts — the kind where quality matters more than gross margin.
This isn't a bad thing. It's a shift in revenue mix that shows L&T is working.
What We Loved: CFO Discipline
L&T brought its working capital down to just 12.7% of sales. At this size and scale, that’s incredible. While other infra giants bleed on payment cycles, L&T seems to have cracked capital efficiency.
In infra/EPC businesses, it’s normal to have 15–20%+ working capital as a % of sales. So when L&T brings it down to 12.7% — it’s a sign of tight project control and improved cash conversion.
It tells us:
“They’re executing faster, collecting quicker, and managing vendor payouts smartly.”
L&T’s Nuclear-Grade Steam Generators: The Quiet National Asset
L&T builds nuclear-grade steam generators for India’s PHWR nuclear reactors.
At their Hazira facility. ASME 'N-Stamp' certified. One of the few private Indian players with that global capability.
This isn’t infra. This is national security.
It signifies what?
"While most companies talk about Make in India, L&T Hazira quietly makes India’s nuclear backbone. That 100-tonne steel vessel, humming inside a reactor in Kakrapar or Tarapur? Yeah — that’s L&T’s signature."
Valuation? PEG Says a Lot
Despite the fundamentals, L&T trades at a PEG of ~1.85. Compare that to peers:
- Siemens: 2.3
- ABB India: 2.1
- BHEL: 3.2
- KEC Intl: 1.6
And yet? L&T's order visibility, balance sheet, and execution are stronger.
Where the Story Goes from Here
During the Q3 FY25 earnings call, L&T’s management didn’t scream optimism. They slipped it in — subtly, confidently. The target?
“10–12% revenue growth, stable margins, and strong order visibility into FY26.”
Do the math on that base, and you’re looking at around ₹2.7 lakh Cr in revenue. Assuming margins hold around 9.5–10.5%, PAT could comfortably cross ₹14,000 Cr.
Here’s the kicker:
That’s a ~15% CAGR in earnings off a massive base. No small feat for a company of this scale.
Think of it this way,
“The market sees L&T as a ₹2 lakh Cr company. The management is quietly steering it toward ₹2.7 lakh Cr in 12–18 months. And they’re not promising magic. Just… delivering.”
This projection isn’t guaranteed. But it’s not unreasonable.
A Story of Reinvention: From Contractor to Country-Builder
Here’s the thing about L&T — it wasn’t always this strategic. In fact, for decades, it was just another giant engineering house. The tipping point came in the early 2000s.
A hostile takeover threat from Reliance made them rethink everything. Instead of playing defense, they pivoted. They created an employee welfare trust, hived off unrelated businesses, and doubled down on being India’s infra brain.
That crisis gave them focus. And what came after? The Hazira engineering complex.
Final Thought: Learn to Read What the Market Ignores
L&T, as we’ve come to understand it, is not just a stock — it’s a proxy for India’s infrastructure, engineering ambition, and strategic self-reliance.
The numbers show execution. The stories reveal evolution. The risks? They’re real. But so is the resilience.
From an investment lens, this isn’t a momentum sprint — it’s a conviction marathon. A slow-burn story that only looks boring if you stop at the chart.
And this — this is what we try to do every day at Shikshan Nivesh. We don’t chase multibaggers. We decode quiet giants. Turn balance sheets into blueprints. Help you see companies for what they teach, not just what they earn.
Written by Shubham Borkar| Research & Insights by Shikshan Nivesh
[Educate · Analyze · Invest]
Disclaimer: This article is for educational purposes only. It is not investment advice. Please do your own research before making any investment decision.
Sources & Disclosures:
- L&T Q1, Q2, Q3 FY25 Investor Presentations
- L&T Q1, Q2, Q3 FY25 Earnings Call Transcripts
- FY24 Annual Report (Larsen & Toubro Ltd.)
- Screener.in (only for peer P/E, not PEG)
- Official website of NPCIL & ASME.org (for Hazira + N-Stamp certification)
- Market cap and financials as of April 2025 (BSE filings and exchanges)
- All charts & visuals created by Shikshan Nivesh (In-house) from company-reported data and verified investor communications.
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