Larsen & Toubro reported a 33% rise in second-quarter profit on Tuesday, buoyed by healthy order inflows amid strong infrastructure spending and reconstruction activity in the Middle East. However, the engineering major cautioned that inflationary pressures, geopolitical tensions, trade uncertainties and climate-related risks continue to cloud the global economic outlook, even as India’s growth momentum remains strong.
"Despite a global environment marked by trade tensions, geopolitical conflicts, and high energy prices, India's macroeconomic fundamentals remained resilient, providing a strong foundation for growth. However, inflation remains a concern, arising from food price volatility, elevated energy costs, and weather-related disruptions," the company said in its outlook.
Read more: Larsen & Toubro Q2 Results: Profit surges 33% YoY to Rs 5,202 crore, revenue grows 16%
"Geopolitical imbalances, trade uncertainties, and climate-related risks continue to affect commodity prices and supply chains. Reflecting these concerns, the Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50% and shifted its policy stance from ‘neutral’ to ‘calibrated tightening’," L&T said.
Ahead of its Q2 results announcement, L&T shares were 0.40% lower at Rs 3,665.10 apiece on the NSE on Tuesday, compared with the previous close of Rs 3,680.
L&T operates energy businesses serving the oil, gas and renewable sectors, and technology services spanning IT, engineering services, digital platforms, data centres and semiconductor design. The company also has manufacturing and financial services units. It also expects revenue from its defence technology business, which develops drones and unmanned systems, to triple over the next five years as it expands capacity to tap growing opportunities in India's defence sector.
However, despite healthy order inflows and continued expansion, the company cautioned that the ongoing war in the Middle East poses downside risks to growth and investment activity.
L&T optimistic about data centres and infra investments
Despite the risks, the company in its outlook said that the global economic outlook is one of guarded optimism, aided by AI Data Center demand in several major economies and fresh investments in infrastructure, energy transition, technology, and industrial capacity.
"The company will continue to leverage its capability and flexibility to successfully navigate the environment. The Company remains focused on operational excellence and the adoption of technology to improve productivity and competitiveness and ensure long-term sustainable growth for its stakeholders," said L&T.
L&T secured orders worth Rs 1,47,665 crore during Q2FY27, registering a 28% YoY growth. The company won several high-value orders across its Hydrocarbon – Offshore and Onshore, CarbonLite Solutions, Public Spaces and Airports, and Power Transmission and Distribution businesses.
Read more: L&T wins ₹10,000-15,000 crore power transmission orders in India, Middle East
International orders stood at Rs 92,375 crore, accounting for 63% of the total order inflow during the quarter.
The engineering and construction major reported consolidated revenue of Rs 78,750 crore, driven by accelerated progress in the various businesses in the projects, products and manufacturing portfolio. International revenue constituted 58% of overall sales.