Larsen & Toubro Ltd (L&T) is India’s largest EPC and capital goods company, with a domestic and MENA-focused international order book. It also operates a thermal plant, Hyderabad Metro, and generates steady cash flows from its IT and NBFC businesses. 

 

The government has announced a capex target of FY26 that would be directed toward railways, roads, defence, energy, and rural/urban development. In parallel, PSUs & private companies are ramping up capacities under the PLI and ‘Make-in-India’ schemes. With its proven track record in infrastructure and expertise in complex engineering projects, L&T is well-positioned to benefit. It is also expanding in the MENA region, where regional governments are boosting capex in hydrocarbons, green energy and power. 

 

The DP segment of L&T —comprising Nabha Power and Hyderabad Metro—has been impacted by weak metro performance. However, monetization of real estate parcels and gradual ridership recovery aided financials. 

 

L&T’s expertise in establishing green hydrogen plants positions it advantageously to capitalize on the promising growth prospects for green hydrogen in India.

• The company provides integrated EPC and modular fabrication services to the emerging green hydrogen and ammonia sectors. 
• L&T is also expanding into the manufacturing of electrolysers and stationary batteries (advanced chemistry cells), catering to both domestic and global markets, aligning with India’s vision to become a green manufacturing hub. 

Why invest in L&T?

Diversified Business Portfolio: L&T operates across a diverse range of high-growth sectors, including construction, engineering, infrastructure, defense, technology, IT/ITES, and finance. This broad diversification reduces risks associated with dependency on any single industry. Moreover, its strong presence in infrastructure and capital goods positions L&T as a fully integrated, one-stop EPC solution provider, offering a distinct competitive edge over its peers. 

 

Strong Backlog of Orders: The company has a substantial order book across various segments, which provides long-term visibility and growth potential. This backlog ensures a steady revenue stream. 

 

Robust Infrastructure Play: L&T is a leader in India’s infrastructure development, benefitting from large-scale projects like smart cities, roads, and renewable energy, which are supported by government spending. 

 

Track Record of Execution: L&T has a proven track record in executing large, complex projects on time and within budget. This is a critical factor for investors seeking stability. 

 

Defensive Characteristics: Due to its exposure to IT/ITES services, through LTI Mindtree and LTTS, the company generates stable cash flow and tends to be less volatile, making it a more stable stock, especially in uncertain economic environments. 

 

Focus on Innovation: The company continues to focus on innovation and technological advancements, particularly in energy, defence and automation solutions, which helps it stay ahead in competitive sectors. 

 

Healthy Balance Sheet: L&T consistently maintains strong cash flow, a solid balance sheet, and stable profitability, making it an attractive option for conservative investors seeking financial stability.