L&T Q3 Results: In this report, we will discuss the third-quarter earnings of one of India’s leading engineering and construction companies, Larsen & Toubro (L&T). On January 30, 2025, L&T announced its financial results for Q3 of FY25. The company recorded a net profit of ₹3,359 crore, reflecting a 14% year-on-year (YoY) growth compared to the same quarter last year. However, the results fell short of analysts’ expectations, leading to a 0.85% decline in L&T’s stock, which closed at ₹3,419.80 on the BSE. Let’s delve into the company’s revenue and profit performance in detail.
L&T’s Revenue and Profit Performance
L&T’s revenue in Q3 FY25 surged by 17% to ₹64,668 crore, up from ₹55,128 crore in the corresponding quarter of the previous fiscal year. However, the company’s EBITDA margin declined by 70 basis points (bps) to 9.7%. Despite a 9% YoY increase in EBITDA to ₹6,255 crore, the performance lagged behind market expectations, which had projected EBITDA to reach approximately ₹6,779 crore. Let’s analyze the reasons behind the decline in L&T’s operating margins.
Reasons Behind the Decline in Operating Margins
The primary reason for the decline in L&T’s operating margins is the increase in raw material and component costs. During the quarter, construction material costs rose by 16%, putting pressure on margins. In Q3 FY24, the operating margin stood at 10.4%, whereas in the current quarter, it has reduced to 9.7%.
Order Book and New Projects
L&T secured new orders worth ₹1,16,036 crore at the group level in Q3 FY25, marking a 53% YoY growth from ₹75,990 crore in the previous year’s same quarter. The new orders span various sectors, including thermal power, renewable energy, power transmission, precision engineering, minerals, metals, hydrocarbon onshore, water management, and commercial buildings.
International markets accounted for 53% of the total order inflow, with L&T securing ₹62,059 crore in overseas orders compared to ₹50,562 crore in Q3 FY24. The table below summarizes L&T’s key financial metrics for Q3 FY25:
| Metrics | Q3 FY25 | Q3 FY24 | Growth (%) |
|---|---|---|---|
| Net Profit | ₹3,359 crore | ₹2,947 crore | 14% |
| Total Revenue | ₹64,668 crore | ₹55,128 crore | 17% |
| EBITDA | ₹6,255 crore | ₹5,740 crore | 9% |
| Operating Margin | 9.7% | 10.4% | -0.7% |
| Total Order Book | ₹1,16,036 crore | ₹75,990 crore | 53% |
| International Orders | ₹62,059 crore | ₹50,562 crore | 22.7% |
Analysts Expectations vs. Actual Performance
L&T’s Q3 results fell short of market expectations. Analysts surveyed by Moneycontrol had estimated an 18% YoY revenue growth to ₹65,065 crore and a 24% increase in net profit to ₹3,656 crore. However, actual profit growth stood at just 14%, while EBITDA also missed expectations, contributing to the stock’s slight decline.
Read this also: HUL Smart Move: Small Pack Preference Boosts Profit Despite Inflation
Conclusion
L&T delivered a strong performance in Q3 FY25, with significant growth in revenue and order inflows. However, rising raw material costs exerted pressure on operating margins. The company’s international order book showed robust growth, signaling positive prospects. Despite strong revenue numbers, the earnings fell short of analysts’ projections, leading to a minor decline in stock price. L&T’s ability to manage rising costs and maintain profitability will be crucial in the upcoming quarters.
