From mint · Nehal Chaliawala · · 1m 30s
L&T's Shankar Raman on steady growth amid volatility
L&T's president says ₹8.5 trillion orderbook and risk diversification keep financial performance steady despite global tensions.
In brief
L&T's president says ₹8.5 trillion orderbook and risk diversification keep financial performance steady despite global tensions. L&T's ₹8.5 trillion orderbook and global business spread help absorb external shocks, maintaining steady earnings while narrowing margins from 10-12% to 7-8%. Originally reported by mint.
L&T's orderbook size
L&T's ₹8.5 trillion orderbook helps absorb external shocks and deliver steady financial performance.
“the scale and diversity of larsen & toubros ₹ 8.5 trillion orderbook helps it absorb the impact of external events and deliver steady financial performance”
Risk diversification strategy
L&T spreads risk across multiple markets and sectors to maintain stability during global tensions.
“the company is engaged in diverse businesses in multiple markets, allowing it to spread risk and be present wherever an investment cycle is active”
Volatility management
L&T avoids dramatic actions to prevent significant financial volatility despite external pressures.
“so, the wheel is so large with ₹ 8.5 trillion of order book; we have sort of come to a zone where there are several compensating factors at play”
Margin impact
L&T's margins narrowed from 10-12% to 7-8% by taking lower risk in project selection.
“the company’s margins have narrowed from around 10, 12% to 7, 8% as it takes less risk”
Third market target
L&T plans to develop Europe and Central Asia as its third major market beyond India and Middle East.
“the top candidates for the company’s third key market are europe and central asia”
Europe expansion
L&T secured ₹50,000 crore offshore wind project in europe through subcontracting.
“l&t last year bagged its largest-ever order worth nearly ₹ 50,000 crore as a subcontractor for a large offshore wind energy project off the shore of the netherlands and germany”
Central Asia projects
L&T builds Tashkent airport, solar projects, and data centres in Central Asia.
“in central asia, the company is building the new tashkent international airport, a solar project, and a data centre, among other projects”
Working capital ratio
L&T reduced working capital to 1.7% of revenue in Q3 2026 through cash flow management.
“the company reported a multi-decadal low working capital ratio of 1.7% to its revenue during the quarter ended 30 september 2026”
Risk avoidance policy
L&T avoids high-risk projects due to technology, social unrest, supply chains, or conflicts.
“it does not bid for projects where it feels the risk-return ratios were high due to numerous reasons like technology, social unrest, supply chain, war, etc”
Future growth plan
L&T aims for $15 trillion orderbook by 2031 with 20% business from each region.
“if the company manages to maintain its current growth rate in getting new business, its orderbook could reach $15 trillion by 2031”
Margin trade-off
L&T prioritizes stability over high margins by avoiding high-risk projects.
“the direct result of it has been that the company’s margins have narrowed from being around 10-12% to 7-8%”
Orderbook distribution
L&T's orderbook will be 20% India, 20% Middle East, 20% Europe/CA by 2031.
“by then, about two-fifths of l&t’s business could come from india, two-fifths from the middle east, and a fifth from the rest of the world”
The main idea
L&T's ₹8.5 trillion orderbook and global business spread help absorb external shocks, maintaining steady earnings while narrowing margins from 10-12% to 7-8%.
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