Larsen & Toubro (L&T) is a prominent Indian multinational conglomerate known for its extensive operations across engineering, construction, manufacturing, technology, and financial services. As of April 05, 2025, the company continues to play a significant role in India’s infrastructure and industrial landscape. This article provides an in-depth analysis of L&T’s business model, its financial performance for Q3 FY25 (October–December 2024), and insights into its promoter details and shareholding pattern as of April 6, 2025.
Larsen & Toubro’s Business Model
L&T operates as a diversified conglomerate with a focus on engineering, procurement, and construction (EPC) solutions, complemented by manufacturing and service-based offerings. Its business model is structured around multiple segments that cater to both domestic and international markets. Here’s a breakdown of its key components:
1. Core Segments
- Infrastructure: This segment is the backbone of L&T’s revenue, contributing approximately 52% of total revenue in the nine months ended FY25. It includes projects like roads, bridges, metro systems, airports, and urban infrastructure. The company leverages its expertise in large-scale project execution to secure contracts from governments and private entities.
- Energy: Accounting for 21% of revenue, this segment encompasses hydrocarbons, power generation (thermal and renewable), and energy transition initiatives like green hydrogen and battery storage. The energy order book stood at Rs. 1.37 lakh crore, with significant international contributions.
- Hi-Tech Manufacturing: Contributing 6% to revenue, this segment focuses on heavy engineering, defense equipment, and specialized manufacturing like electrolyzers for green hydrogen.
- Services: This includes IT services (via LTI Mindtree) and financial services, making up 19% of revenue. IT services have seen steady growth, though margins have faced pressure due to wage hikes.
- Others: A smaller segment (2% of revenue) that includes miscellaneous activities like realty and asset monetization.
2. Revenue Streams
L&T’s revenue model relies heavily on project-based income from EPC contracts, supplemented by manufacturing sales and service fees. International revenues have been a growing contributor, accounting for 51% of Q3 FY25 revenue (Rs. 32,764 crore), driven by execution in the Middle East, Africa, and other regions.
3. Order Book Strategy
The company maintains a robust order book—reaching a record Rs. 5.64 lakh crore as of December 31, 2024—ensuring long-term revenue visibility. Of this, 42% comes from international orders, reflecting L&T’s expanding global footprint. The domestic order book (Rs. 3.27 lakh crore) is supported by central and state governments (41%), state-owned enterprises (39%), and the private sector (20%).
4. Innovation and Sustainability
L&T has integrated sustainability into its strategy, with investments in green hydrogen (Rs. 35 crore pilot project), electrolyzer manufacturing (Rs. 1,500 crore capex), and battery storage (Rs. 2,500 crore). Its Lakshya 2026 plan emphasizes exiting non-core businesses, scaling digital offerings, and improving return on equity (ROE) to 18%+ through divestitures and margin optimization.
5. Risks and Dependencies
The business model is capital-intensive, relying on timely project execution and government spending. Delays in payments, geopolitical tensions, and resource availability pose risks, especially for international projects. The IT and financial services segments, while diversifying revenue, are subject to market volatility and operational challenges.
Q3 FY25 Earnings: Financial Performance
L&T released its Q3 FY25 financial results on January 30, 2025, reflecting a solid performance driven by a strong order book and execution momentum. Below is a detailed analysis based on available data:
1. Revenue
- Consolidated revenue reached Rs. 64,668 crore, up 17.3% year-on-year (YoY) from Rs. 55,128 crore in Q3 FY24.
- Sequential growth was modest at 5% from Rs. 61,555 crore in Q2 FY25.
- International revenues contributed Rs. 32,764 crore (51% of total), highlighting the company’s global execution strength.
2. Net Profit
- Consolidated net profit rose 13.9% YoY to Rs. 3,359 crore, compared to Rs.Arenas & Toubro Ltd reported a consolidated net profit of Rs 2,947 crore in Q3 FY24.
- This growth was tempered by higher expenses, which increased 17.8% YoY to Rs. 60,303 crore.
3. Order Inflows
- L&T secured orders worth Rs. 1.16 lakh crore in Q3 FY25, a 53% YoY increase, pushing the order book to Rs. 5.64 lakh crore—a 19% rise from March 2024.
- International orders accounted for 42% of the backlog.
4. Segment Performance
- Infrastructure: Continued to dominate revenue contribution, though specific Q3 figures weren’t detailed.
- Energy: Boosted by a mega international onshore hydrocarbon order and thermal power plant contracts.
- IT Services (LTI Mindtree): Revenue grew 7% YoY, but EBITDA margins dropped from 8% to 6% due to wage hikes.
5. Nine-Month Overview
- For April–December 2024, consolidated revenue was Rs. 1.81 lakh crore (up 18% YoY), with international revenues at Rs. 91,070 crore (50% of total).
6. Management Outlook
- Chairman S.N. Subrahmanyan noted the quarter’s record order inflows and expressed optimism about infrastructure-led growth in India, driven by the upcoming Union Budget’s focus on energy transition and technology adoption.
Promoter Details
L&T does not have a traditional promoter group in the conventional sense, as it was founded by two Danish engineers, Henning Holck-Larsen and Søren Kristian Toubro, in 1938. Over time, it evolved into a professionally managed company with no single family or individual promoter dominating ownership. As of the latest available data:
- Promoter Holding: Publicly available records indicate that L&T has 0% promoter shareholding, distinguishing it from many Indian conglomerates where founding families retain significant stakes.
- Management Influence: The company is led by a professional board and management team, with S.N. Subrahmanyan serving as Chairman and Managing Director. Key decisions are driven by institutional and shareholder interests rather than a promoter entity.
This structure reflects L&T’s transition into a widely held corporation, aligning with its global operational scale and diversified ownership.
Shareholding Pattern
As of the latest available data (up to March 2024, with minor updates from recent quarters), L&T’s shareholding pattern is as follows:
- Promoters: 0% (as noted above).
- Foreign Institutional Investors (FIIs): 20.83% – Reflecting strong international investor interest, particularly from markets like the Middle East and North America.
- Domestic Institutional Investors (DIIs): 41.71% – Includes mutual funds, insurance companies, and banks, indicating significant domestic institutional confidence.
- Retail/Public Shareholding: 37.46% – A substantial portion held by individual investors, showcasing broad public participation.
Disclaimer: This article on Larsen & Toubro’s business model, Q3 FY25 earnings, promoter details, and shareholding pattern is based on publicly available information as of April 6, 2025. It is for informational purposes only and not financial or investment advice. While accurate to the best of our knowledge, the data may not be complete or current, and readers should verify details with official sources before making decisions. The author is not liable for any losses or consequences from using this information.
