L&T Q3 Profit Declines Despite 53% Surge in Orders, Rising Costs Pressure Margins

However, L&T's revenue showed strong growth, increasing by 17% year-on-year to Rs 64,668 crore in Q3FY25, up from Rs 55,128 crore in Q3FY24.

Larsen & Toubro (L&T) reported a slight dip in its net profit for the third quarter (Q3) of the financial year 2024-25. The company's net profit stood at Rs 3,358.84 crore, marking a decrease of over 1% compared to the previous quarter's Rs 3,395.29 crore.

However, L&T's revenue showed strong growth, increasing by 17% year-on-year to Rs 64,668 crore in Q3FY25, up from Rs 55,128 crore in Q3FY24.

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Despite this growth, the company's performance fell short of market expectations, primarily due to a decline in operating margins.

L&T’s EBITDA margin slipped by 70 basis points to 9.7% in Q3FY25 from 10.4% in the same period last year. This margin compression was driven by a steep rise in costs, including a 50% increase in raw materials and components, and a 16% increase in construction material costs. The company's infrastructure projects segment continues to face pressure on margins, exacerbated by competitive contract bidding post-pandemic and the geopolitical challenges following the Russia-Ukraine conflict.

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The Energy Projects segment also experienced a decline in margins, with the EBITDA margin falling to 8.3% from 9.7% year-on-year.

On a positive note, L&T's IT & Technology Services segment saw a 7.7% revenue increase to Rs 12,061 crore in Q3. However, profits from this segment declined by 7% to Rs 1,833.8 crore, and the EBITDA margin slipped to 18.7% from 20.7% last year. The company remains optimistic about future growth in this segment, driven by recent deal wins and improved market sentiment.

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L&T's order book has grown to Rs 5,64,223 crore by the end of December 2024, with international markets contributing about 42% of the total. This represents a significant increase from Rs 4,69,807 crore recorded in the previous year.

Despite the margin pressures, L&T's robust order book and revenue growth indicate a strong future outlook, especially in international markets and IT services.

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