Mumbai & Delhi: A decade after (L&T) decided to exit asset ownership in conventional infrastructure because of poor returns, India’s largest engineering and infrastructure company is once again putting large projects on its balance sheet—but this time in businesses where it can own assets and capture the economics of operating them.
Over the past two to three years, the Mumbai-headquartered conglomerate has committed capital to data centres, green hydrogen production and electronics manufacturing, marking a selective reversal of its long-standing asset-light strategy.
Instead of merely building infrastructure for customers and handing over the assets, the company plans to own some of these facilities and earn revenue from the products and services they generate—from computing capacity and AI and cloud services to green molecules and electronics.
“There is a change in the direction of investments—aligned with opportunities in new high-growth industries and with our increased and growing capacity to invest,” Anup Sahay, head of corporate strategy and special initiatives at L&T, said in an emailed response to Mint’s detailed questionnaire.
“Our earlier high-value investments were in conventional infrastructure projects that were also in the nature of public goods or public utilities, such as metro, expressways, and power plants. Our current investments are directed at new-age industries with high growth, and with opportunity for technology play,” he said.
Among its recent large capital investments is an electronics manufacturing plant in Tamil Nadu’s Coimbatore that will provide contract manufacturing services and produce automotive components. The business was announced in April and will be housed under L&T Electronic Products & Systems.
Similarly, L&T Vyoma operates two data centres with a capacity of 32 megawatt (MW). In January, it broke ground on another 100MW facility in Navi Mumbai, and also has a fourth facility being built in Whitefield, Bengaluru—with a total 200MW in planned additional capacity.
Additionally, L&T Energy Greentech is building a 10,000 tonnes-per-year green hydrogen plant for Indian Oil Corp. Ltd’s Panipat, Haryana, facility, where it will own the asset and sell the gas to the oil marketing company.
L&T has not disclosed its investment in these projects.
Course correction
The strategy of selectively owning assets marks a significant departure from the strategy L&T adopted a decade ago. In its 2016 five-year strategic plan titled ‘’, it decided to exit asset ownership in conventional infrastructure assets such as roads, metro rail projects, power plants and power transmission lines due to lower returns on investments.
It has since divested from its portfolio of road assets, a thermal power plant in Punjab, a metro rail project in Hyderabad, and an electrical switchgear manufacturing business, among others.
According to Sahay, when its infrastructure projects failed to deliver returns in line with its aspirations, it divested them to maintain a strong balance sheet. This created a gap before the company could return to making large investments, he added.
“The current investments in and AI infrastructure, in green hydrogen and electronics, are of high value. However, unlike the investments in the past, the current opportunities are amenable to investment in a calibrated manner,” he said.
The projects will be developed in phases, based on reasonably certain visibility into customer demand and early revenue generation, he said.
Need of the hour
The pivot was imperative for L&T to sustain its growth rate at its already behemoth-sized scale, according to Amit Anwani, vice-president and lead analyst for capital goods, industrials and defence at brokerage PL Capital. The a top line of ₹2.9 trillion, and booked fresh orders worth ₹4.4 trillion in FY26. Its total order book stood at ₹7.4 trillion at the end of FY26, and stands at ₹7.8 trillion currently.
“A data centre is different from a road or a metro project. The margins in these newer businesses are captured by selling the compute or the green molecules rather than just building these assets for others, so it makes sense that they are looking to own these assets,” Anwani said. “Now we need to see what kind of return ratios L&T can generate from these new businesses.”
L&T reported 16.6% return on equity in FY26, excluding one-time cost impacts, according to the company’s investor presentation.
Even among newer businesses, the company has been choosy about where it will own assets. For instance, it has entered electronics manufacturing and semiconductor design, but it has stopped short of manufacturing semiconductors.
Similarly, it will own green ammonia plants, but it has stayed clear of asset ownership in the rest of the renewable-energy ecosystem. L&T builds solar plants, battery energy storage systems, pumped hydro storage plants and factories for others, but it will not own any of these assets.
“L&T is not abandoning capital discipline. Its practice is to build a capital-heavy business, prove it, and structure it for the next owner: cement went to Grasim in 2004 and the road concessions to an infrastructure fund in 2024. Vyoma.AI, a new subsidiary receiving the business at an independent valuation, follows that pattern,” said Sanchit Vir Gogia, founder and chief executive of independent technology analysis and consultancy firm Greyhound Research.