MUMBAI: Larsen and Toubro Ltd has set itself ambitious goals in a new five-year plan called Lakshya 31, which, if achieved, could double its revenue, ensure diversification into new segments like green hydrogen, electronics and semiconductor manufacturing, and create a listed real estate business.
The plan also outlines operating green hydrogen and ammonia plants, which at least one analyst flagged as less margin accretive, hurting the company’s overall return on investment.
achieved the revenue and order inflow growth aims it set in its previous five-year plan called Lakshya 26, while missing the return on equity (RoE) goal. Its performance on its five-year plan stands in stark contrast to companies that fail to meet even their one-year guidance in the face of global volatility.
Shares of Larsen and Toubro Ltd fell 1.18% on the BSE on Wednesday to close at ₹4,008.35. The benchmark Sensex gained 1.22%.
Mint looks at the company’s Lakshya 31 plan and its performance on the Lakshya 26 plan.
What are the targets under Lakshya 31?
India’s largest engineering company has set itself a target of 12-15% compounded annual growth from FY26 to FY31. That translates into a doubling of revenue by FY31 to ₹5.8 trillion at the upper end of the target.
The company expects 10-12% compounded annual growth in order inflows. If achieved, at the upper end of the target, that would result in annual order inflows of ₹7.75 trillion by FY31. The company booked new orders of ₹4.4 trillion in FY26, taking its orderbook to ₹7.4 trillion. RoE of 16-17% has been estimated over this period compared with 16.6% in FY26.
“The 12-15% CAGR revenue guidance is good. But the 10-12% order inflow guidance implies that the company has estimated single-digit order inflow growth in the infrastructure segment, which is underwhelming,” said Amit Anwani, VP and lead analyst for capital goods, industrials and defence at brokerage PL Capital.
If infrastructure order inflows grew at a double-digit rate, the overall order inflow could easily achieve a CAGR of 14-15%, he said. This would be due to the rapid growth in the energy and hydrocarbons segments, which receive large orders from West Asia.
“The return on equity target also seems underwhelming, especially considering that the company is exiting its Nabha Power and Hyderabad Metro assets, which provided low returns,” Anwani said.
The lower returns could be due to plans to build, own and operate and green ammonia assets, data centres and semiconductor manufacturing, which could affect return ratios, he said.
“Owning assets goes against the company’s long-stated target of being asset light, which is why it exited the ownership of road assets and now Nabha Power and Hyderabad Metro,” he said.
What are the strategic objectives under Lakshya 31?
L&T has framed strategic objectives in its new plan including the entry into green hydrogen and green ammonia supply, , industrial electronics manufacturing and offshore and onshore wind energy development.
The company has earmarked capital expenditure of ₹42,400 crore for these projects – industrial electronics ( ₹5,000 crore), semiconductor manufacturing ( ₹3,000 crore), green hydrogen ( ₹15,000 crore), data centres ( ₹10,000 crore), realty business ( ₹4,400 crore) and upgrading the existing hydrocarbon facility ( ₹5,000 crore), as per a report from Antique Stock Broking published on Wednesday.
“The company aims to maintain a disciplined and calibrated capital allocation framework, with continued focus on asset-light growth, technology adoption and improving return ratios,” analysts at ICICI Direct noted on Wednesday.
How did the company fare on Lakshya 26?
L&T beat the revenue and order inflow targets under Lakshya 26.
FY26 revenue of ₹2.86 trillion was beyond its target of ₹2.7 trillion. The order inflow target of ₹3.4 trillion was handsomely beaten with new orders worth ₹4.4 trillion in FY26.
However, the company missed its RoE target of 18%, achieving 16.6%.