L&T’s standalone margin improves, but the stock falls after results
Revenue growth outpaced expenses sequentially, although a higher tax rate limited the conversion of pre-tax profit into net profit.
Filed 07 May 2026, 18:28 IST · after market close · Larsen & Toubro Ltd (LT)
Key takeaways
- Standalone operating margin widened by 1.59 percentage points as revenue grew faster than expenses sequentially.
- Net profit rose 25.74% quarter on quarter, below the 38.79% increase in pre-tax profit as the tax rate climbed 7.87 percentage points.
- The stock fell 3.42% five sessions after the results, an unusual direction given that seven of its last eight result-day reactions were positive.
Price around the results
Q4 revenue growth lifted standalone operating profit
Larsen & Toubro’s standalone revenue rose 24.50% sequentially to Rs 47,190.86 cr, while operating profit increased 48.25% to Rs 4,690.53 cr. Revenue grew faster than expenses, which rose 22.34%, lifting operating margin by 1.59 percentage points to 9.94%.
Higher tax reduced profit conversion
Pre-tax profit increased 38.79% sequentially, but net profit rose 25.74% as the tax rate moved up 7.87 percentage points to 24.20%. Other income fell 15.41% but still contributed 19.22% of pre-tax profit, making it a material part of reported earnings quality.
Margin recovery continued, but remains below peers
Operating margin has risen for two consecutive quarters, from 6.61% in Q2FY26 to 8.35% in Q3FY26 and 9.94% in Q4FY26. The margin was 5.72 percentage points below the 15.66% median for 71 Industrials peers that had reported the quarter, placing L&T 13 companies from the bottom.
Market reaction was weaker than L&T’s usual results pattern
The stock fell 1.13% on the reaction day and was down 3.42% after five sessions, underperforming the market by 2.38% and 0.84%, respectively. The direction was unusual: seven of the company’s last eight result reactions were positive, with a median absolute move of 3.66%.
Q4FY26 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ |
|---|---|---|---|
| Revenue | ₹47,191 cr | ₹37,903 cr | +24.50% |
| Other income | ₹903 cr | ₹1,067 cr | -15.41% |
| Expenses | ₹42,500 cr | ₹34,739 cr | +22.34% |
| Operating profit | ₹4,691 cr | ₹3,164 cr | +48.25% |
| Operating margin (%) | 9.94% | 8.35% | — |
| Interest | ₹374 cr | ₹351 cr | +6.81% |
| Depreciation | ₹521 cr | ₹496 cr | +5.06% |
| Profit before tax | ₹4,698 cr | ₹3,385 cr | +38.79% |
| Tax | ₹1,137 cr | ₹553 cr | +105.68% |
| Net profit | ₹3,561 cr | ₹2,832 cr | +25.74% |
| EPS (₹) | ₹25.89 | ₹20.59 | +25.74% |
Operating margin of 9.94% compares with a Industrials sector median of 15.66% across 71 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.13% | -2.38% |
| Next session | -0.78% | — |
| 5 sessions | -3.42% | -0.84% |
| 15 sessions | -0.17% | — |
| 30 sessions | +3.34% | — |
Volume on the results session was 2.92× its 20-day average.
What to watch
- Whether standalone operating margin holds above 9.94%.
- Whether other income remains a material contributor near its 19.22% share of pre-tax profit.
- Whether net profit growth improves relative to pre-tax profit growth after the 24.20% tax rate.