Strong order momentum, execution to catch up; OW

Research evidence excerpt

Strong order momentum, execution to catch up; OW

lutions more than doubling as execution on the large thermal order book

gathered pace. Legacy Hydrocarbon jobs are substantially complete, which should support

a gradual improvement in the segment’s margin profile.

Manufacturing & Products margin decline was mix-driven: Segment revenue increased

9%, led by Precision Engineering & Systems and Construction Equipment. The 230bp

margin decline to 15.2% primarily reflected a greater contribution from lower-margin

businesses. Heavy Engineering margin remained broadly stable at approximately 24%,

while Precision Engineering & Systems margin declined as the execution mix changed.

PAT benefited from elevated treasury income: Other income increased 75% YoY to

Rs23.8bn, supported by higher group surplus funds and improved yields. Management said

that treasury income accounts for approximately 70% of total other income and that the

current run rate may remain reasonable for another one or two quarters. It should

moderate as cash is deployed into data centres, green assets and other Lakshya 2031

growth businesses.

Concessions exit remains on track: The Nabha Power divestment was completed on June

25, 2026. Hyderabad Metro has not been consolidated from May 2026, and management

expects the transaction to close by September 30, 2026. The proposed merger of L&T

Power Development into the parent should further simplify the corporate structure and

consolidate the residual assets and liabilities of the former power-development portfolio.

Cash conversion remains healthy despite normalisation: Cash flow from operations

excluding Financial Services was Rs43bn, compared with Rs58bn a year ago, as working

Morgan Stanley Research 3