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Inflows ramping up sharply

We recently met the company to understand the progress on projects and inflow scenario across different locations. West Asia crisis has impacted work on some onshore, hydrocarbon and solar projects. Company is focusing on higher fabrication in India for these projects and ramping up execution in domestic and large private projects to offset this weakness. Despite the ongoing crisis in the Middle East, inflows from that region have ramped up sharply for LT, and out of the total announced order inflows of ~INR1.3t so far in 2QFY27, projects worth ~INR775b were announced from the Middle East. With a prospect pipeline of INR15t for 9MFY27 and an order book of INR7.8t as of Jun’26, we expect LT’s core EPC order inflows/revenue to grow at 10%/14% CAGR over FY26-29. Reiterate BUY with a SoTP-based TP of INR4,400 valuing core business at 25x Dec’28 estimates

Inflows have ramped up sharply over last few months

LT’s inflows stood at INR873b as of 1QFY27, and announced order inflows during 2QFY27 have ramped up sharply since then across domestic and international segments for large, mega and ultra-mega projects. Despite the ongoing West Asia crisis, ordering from the Middle East has ramped up sharply with LT announcing more than INR775b worth of orders so far from hydrocarbon, offshore projects, infrastructure, gas compression plants and BESS. Domestic ordering announced during 2QFY27 includes NTPC thermal power projects, DVC thermal power project, platform and pipeline projects from ONGC and a mega order from NVIDIA for building India’s largest NVIDIA B300 AI factory. Going ahead, the company is optimistic about inflows from both domestic and international geographies. We currently bake in order inflows worth INR3.8t/INR4.3t for LT for FY27/28, with 1HFY27 announced inflow run rate ranging around INR2t.

International ordering remained strong in 2QFY27

LT has diversified beyond the Middle East too for orders from international geographies such as Europe, Africa, Canada and now targeting North Asia, South Korea, Japan and Taiwan. Along with this, from 2QFY27, ordering from the Middle East too was very strong as various large and mega projects were awarded to LT. The West Asia crisis had earlier impacted overall ordering in GCC region (see Exhibit 4), while it has started moving up recently. The company believes that hydrocarbon spending will remain the prime ordering driver, followed by power and BESS and core infrastructure-related spending in the Middle East. The company’s focus will also be on execution now and is targeting modular fabrication in India and later export it

Domestic ordering ramping up from private sector and select government projects

LT is optimistic on continuity of inflows from buildings and factories particularly for semiconductor plants and data centers, along with real estate. Ordering from ferrous and non-ferrous segments has also started picking up from last year. The company has also built a portfolio of five projects on thermal power projects from NTPC, Adani Power, Torrent Power, NTPC (Lara project) and DVC and is eying further projects on thermal power. On defense too, as per industry reports, LT can get contract for first batch of 59 Zorawar tanks and NGC.On the nuclear side, LT expects inflows to ramp up, supported by India’s target of increasing its nuclear capacity from current 8.9GW to 22.5GW by FY32 and eventually to 100 GW by FY47.

Execution in focus

LT remains focused on execution of both domestic and international projects. So far, due to West Asia crisis, onshore projects, hydrocarbon and solar project execution in the Middle East was softer. Logistics costs have increased but company is hopeful of passing them on to the clients. Impact of logistical bottleneck due to closure of SoH is more seen in Qatar and Kuwait due to lack of alternate routes, while Saudi Aramco and UAE are exploring alternate routes. For LT’s execution of large order from Qatar, currently the modular fabrication is happening in India and this will have to be transported from India by 4QFY27 through SoH. For a large Tennet order too, where LT now has an order book worth INR600b, the modular fabrication will happen in India. Domestic execution too will start ramping up from private projects, thermal power and buildings and factories related projects. LT’s thermal power order book comprises five projects now (from NTPC, Adani, Torrent Power, NTPC Lara project and now from DVC), which will see execution ramp-up in coming quarters and years. We bake in core EPC revenue to grow at 14% CAGR over FY26- 29.

LT’s market share remains strong in its prospect pipeline

LT has historically maintained >20% market share in the overall prospect pipeline. The company has a prospect pipeline of INR15t for 9MFY27 across domestic (INR7.5t) and international (INR7.5t). With INR873b already received in 1QFY27, LT’s 20% market share translates into potential inflows of INR3t for 9MFY27, in line with our full-year expectation of INR3.8t. We expect LT’s win rate to be higher in domestic thermal and defense prospects.

Financial outlook and view

We expect core E&C order inflow/revenue/EBITDA/PAT to clock a CAGR of 10%/14%/16%/17% over FY26-29. At the current price, for core E&C, LT is trading at 27x/23x/19x P/E on FY27/28/29E earnings. We maintain our SoTP-based TP of INR4,400, based on 25x on Dec’28E earnings for the core business and a 25% holding company discount to subsidiaries.

Key risks and concerns

Continuation of West Asia crisis and blockage of SoH, slowdown in order inflows, delays in the completion of mega and ultra-mega projects, a sharp rise in commodity prices, an increase in working capital, and increased competition are a few downside risks to our estimates.

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