Larsen & Toubro reported consolidated revenue growth of 17.2% for Q2 FY27, led by its Semiconductors division, which contributed 16.5% of the total. Operating margin held at 4.5%, a few basis points below the previous quarter as higher logistics and wage costs offset operating leverage.
Analysts were broadly constructive. Of 18 brokerages covering the stock, 12 maintain buy ratings, with target prices implying about 16.5% upside. The more cautious voices pointed to a valuation premium and the execution risk inherent in a large expansion programme.
The numbers
The company also announced a new facility near Kandla, designed to add about 1,532 tonnes of annual capacity and create roughly 1,200 jobs. Construction begins next quarter, and first production is targeted within 20 months. The plant will be built to meet European environmental standards.
Employees and communities are part of the plan: a skills academy near the new site will train 2,000 technicians over three years, funded jointly with the state government. Management said local hiring is a condition of the incentives it has received.
By the numbers
On the post-results call, management said the order book now stands at $2.8 billion, equivalent to roughly 14 months of revenue, with about a third from export customers in UAE and South Korea. The chief financial officer described visibility as the best in five years.
“We are building where the customers are asking us to build. That is the simplest capital-allocation rule there is.”
Expansion and capital allocation
Balance-sheet metrics remain comfortable. Net debt to earnings stood at 0.8 times, and the company retired $403 million of high-cost borrowings during the quarter. Credit analysts say the improvement leaves room to fund the expansion without equity dilution.
Source: IGEN Intelligence analysis of industry association surveys data. Illustrative mock data.
Export performance was a bright spot. Shipments to UAE rose 17.2%, helped by certification wins and shorter lead times from Kandla. Management said it would deepen its presence in the market by adding a local warehouse and a technical service team.
| Segment | Revenue | YoY | Margin |
|---|---|---|---|
| Semiconductors (core) | $187M | +11.7% | 10.7% |
| Exports | $109M | -2.8% | 24.1% |
| Domestic retail | $374M | +0.7% | 19.8% |
| Services | $293M | +13.8% | 20.1% |
| Other | $235M | +20% | 20.3% |
Customers, contracts and exports
Risks were not ignored. Executives flagged input-cost volatility, potential delays in environmental clearances for the new plant and the possibility of tougher competition from lower-priced imports. They said a pricing-pass-through mechanism covers about 60 percent of exposure.
Timeline of key events
- Results announced
Revenue up 17.2%; margin steady at 4.5%.
- Capex raised
Guidance moves to $2.8 billion to fund automation and debottlenecking.
- Supply pact signed
Multi-year agreement with Ultratech Cement at index-linked pricing.
- Groundbreaking
Construction at the new facility near Kandla begins.
- First production
Targeted within 20 months of groundbreaking.
Environmental, social and governance targets also featured. The company reiterated its goal to reduce emissions intensity by a third by 2032, and disclosed that 16.5% of electricity at its main sites now comes from renewable sources under long-term contracts.
Expert commentary
“Visibility is worth more than growth. We can plan investments when we can see 14 months ahead.”
“Buyers are paying a premium for certainty. Suppliers who can document, deliver and communicate will capture it.”
“The risk I would watch is a sudden policy move in UAE. Everything else can be hedged or absorbed.”
Risks and analyst view
Capital expenditure guidance was raised to $2.8 billion for the fiscal year, from $403 million previously. Management said the increase reflects accelerated spending on automation and on debottlenecking existing lines, which it expects to deliver 4.5% more output without additional land.
What it means for you
Order visibility and a manageable balance sheet support the story; track execution on the new plant and margin pass-through.
Expansion will lift procurement; engage early on qualification for the new lines.
Longer-term agreements offer price stability in exchange for volume commitments; compare index-linked terms carefully.
About 1,200 direct roles and a technician academy are planned near Kandla; applications open with the state skills portal.
Companies and leaders in this story
Frequently asked questions
Sources
- Industry association surveys: Member-level compliance and sentiment data
- Central Board of Indirect Taxes & Customs: Port-level clearance and dwell data
- Reserve Bank of India: Exchange-rate and trade-credit bulletins
- UN Comtrade: Bilateral trade flows by HS code
Mock content for demonstration. Names, figures and quotes are illustrative and not real reporting.
