Larsen & Toubro Ltd (NSE: LT) Q3 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Parameswaran Ramakrishnan — Vice President of Corporate Accounts and Investor Relations
Subramanian Sarma — Deputy Managing Director & President
Analysts:
Mohit Kumar — Analyst
Sumit Kishore — Analyst
Amit Anwani — Analyst
Aditya Bhartia — Analyst
Mohit Pandey — Analyst
Puneet Gulati — Analyst
Bharanidhar Vijayakumar — Analyst
Atul Tiwari — Analyst
Priyankar Biswas — Analyst
Amit Mahawar — Analyst
Pulkit Patni — Analyst
Aditya Mongia — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to the Q3FY26 earnings conference call hosted by Larsen & Toubro. As a reminder, all participant lines will be in the Listen Only board and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star and then zero on your touchtone phone. I now hand the conference over to Mr. P. Ramakrishnan from Larsen & Toubro. Thank you and over to you Mr. Ramakrishnan.
Parameswaran Ramakrishnan — Vice President of Corporate Accounts and Investor Relations
Thank you Darwin. Good evening ladies and gentlemen. A warm welcome to all of you to the Q3 9 months FY26 earnings call of Larsen and Toubro. The earnings presentation was uploaded onto the Stock Exchange and on our website at 6:45pm I hope you had had a chance to take a quick look at the numbers and the presentation details as well. I will first walk you through the important highlights for Q3 FY26 in the next 20 to 25 minutes or so post which we will take Questions Please note that when the Q and A session starts I will also have with me our Deputy Managing Director and President Mr.
Subranim Sharma. Before I begin the overview, the disclaimer from our end the presentation which we have uploaded on the Stock Exchange and our website today, including the discussions we may have on the call today, may contain certain forward looking statements concerning lt’s business prospects and profitability which are subject to several risks and uncertainties and the actual results could materially differ from those in such forward looking statements. I would request you to go through the detailed disclaimer which is available in slide 2 of our earnings presentation that we have uploaded a while ago. I will start with a brief overview on the economic conditions in India and the Middle east which are key markets for the company especially for its projects and manufacturing businesses.
The Indian economy continues to demonstrate resilience supported by steady growth conditions and easing inflationary pressures. The Q2 GDP growth printed at 8.2%, a six quarter high and underpinned by robust performance in the projects and manufacturing and the services sectors. The full year real gdp Growth for FY26 is projected at 7.3%. The inflation dynamics have also improved with CPI easing materially. The RBI now anticipates CPI inflation at 2.9% for Q4 FY26. The continued emphasis on capital outlays remains likely with indications of calibrated reallocations towards strategic sectors such as defence. Additional funding support for urban redevelopment and infrastructure modernization is anticipated reflecting the government’s broader focus on strengthening carbon capacity and service delivery.
Private CAPEX in India through 2025 remain supported by residential and commercial real estate activity, increasing investments into digital infrastructure, data centers and the power sector that including renewables as well. Semiconductors are emerging as a new age capex theme supported by policy initiatives and announced project pipelines. Within manufacturing, capex continues in sectors such as cement, broadly reflecting domestic demand and capacity requirements. Capex in iron and steel and other base metals continues to be influenced by capacity expansion and modernization plans and a supportive medium term demand outlook. The global economy is entering calendar 2026 with growth expected to remain modest at roughly the 3% range.
The United States is anticipated to continue outperforming other major advanced economies supported by relatively accommodative financial conditions, though some moderation in momentum is likely as fiscal support gradually tapers off the growth in the euro area and Japan is expected to remain measured. Turning on to the GCC region, the growth is expected to remain a relative buy end in 2026 with real GDP expansion projected in the 4 to 4.5% range. In Saudi Arabia and the UAE, capital deployment remains oriented towards priority transformation agendas and including large scale investments in digital and AI enabling infrastructures such as data centers and cloud capacity.
Alongside ongoing urban development and infrastructure initiatives. The region is also seeing sustained investment momentum in gas and renewable energy projects reflecting long term energy diversification goals. Having covered the macro landscape, let me now share a few important highlights for the quarter with respect to L and T. Number one LT reality, the parent Classonen 2 Pro has initiated a transfer of its Reality business undertaking to LT Reality Properties Limited Wholly owned subsidiary through a slum sale under a scheme of arrangement subject to regulatory approvals. This marks the start of a phased consolidation of all real estate assets into a unified platform positioning LT Reality for greater scale, agility and financial strength to capitalize on India’s real estate growth.
Point number two the precision engineering and systems business of the company entered a strategic partnership with General Atomics Aeronautical Systems to manufacture medium altitude long endurance remotely piloted aircraft systems RPAS in India. Under this partnership, L and T will participate in the upcoming 87 mail RPAs program of the Ministry of Defense where L and T will be the prime bidder and General Atomics the technology partner. Point number three the heavy engineering business of the company has signed a memorandum of understanding with the US based nuclear energy solutions provider Holtec International’s Asia arm to offer design and build solutions for heat transfer equipment.
This collaboration is intended to provide advanced solutions for nuclear and thermal power plants worldwide with a particular emphasis on heat transfer technologies for conventional power plant islands and balance of plant systems. Number four Data Center Business the Data center business has announced the rebranding of its business as Larsen and Tubro Bioma. The brand will spearhead LT’s expansion into hyperscale data centers across key Indian metros including Mumbai, Chennai and Bangalore, with facilities designed to support high performance computing and advanced data storage requirements. Point Number five the company has earned the coveted honor of being the only Indian corporate featured among the top 200 environmental firms globally in the latest list of Top Environmental Firms published by the New York based Engineering News Record.
Lastly, the company’s MSCI ESG Ratings was upgraded from BBB to A in November 2025. I will now cover the various financial performance parameters for Q3FY26. We witnessed our highest ever quarterly order inflows in Q3FY26 of Rupees 1.356 billion recording a 17% growth year on year led by a strong ordering momentum witnessed across both India and overseas markets. Out of the total order inflows in Q3 that I just now stated of rupees13.56 billion, the projects and manufacturing order inflow constituted rupees 1.164 billion up by 18% on a Y on Y basis of this rupees 1.164 billion of order inflows of the projects and manufacturing segment, the domestic orders were at rupees 620 billion up 30% and international orders constituted balance rupees 544 billion up 7%.
The group revenues grew 10% Y on Y led by steady progress across most of the businesses. The project execution levels remain broadly in line with expectations barring a few sector specific challenges. The projects and manufacturing portfolio margin improved by 50 basis points y and y to 8.1% as of December 2025. The net working capital to revenue ratio improved to 8.2% reflecting an improvement of 450 basis points on a Y on Y basis. Our recurring PAT at rupees 44 billion reported a strong growth of 31% y and y. The reported PAT for Q3FY26 was at rupees 32 billion and down by 4% y on y.
Owing to a one time impact of rupees 11.9 billion arising from the new Labor Code legislation. Our return on Equity as on 31st December 2025 is at 16.5% and is up 40 basis points y on Y. The return on equity includes an impact of almost 110 basis points arising from this one time provision on account of labor. Now I move on to the individual performance parameters. During the quarter our group order inflows stood at rupees 1.36 trillion registering a Y on Y growth of 17% driven by the sustained traction across our key businesses. Within this, the projects and manufacturing portfolio crossed the Rupees one trillion order inflow marked for the first time with order inflows of rupees 1.16 trillion up 18% y and y underscoring a broad based demand environment across both domestic and international markets.
The growth in the PNM portfolio was driven primarily by strong domestic inflows which grew 30% as I said earlier and international inflows up 7% y and wide. The increase in domestic order inflows was led by Hydrocarbon, Carbon Light Solutions and the buildings and factories businesses. The growth in international orders was supported by the renewables and power transmission and distribution subsegment. During the current quarter international orders accounted for 47% of the projects and manufacturing portfolio compared to 52% in the corresponding quarter of the previous year. Now moving on to the Prospects pipeline. Our prospects pipeline is at rupees 5.92 trillion for the near term vis a vis rupees 5.51 trillion at the same time last year representing an increase of 7% on a Y on Y basis.
The increase in the Prospects pipeline is mainly led by Carbon Life Solutions and the precision engineering and systems businesses. The broad breakup of the overall prospects pipeline for the near term is as Follows. Infrastructure Rupees 4.02 trillion which is almost in line with the previous year Number of Rupees 4 trillion Hydrocarbon segment Rupees 1.26 trillion vis a vis Rupees 1.44 trillion last year Carbon Light Solutions Rupees 0.40 trillion vis a vis less than 0.01 trillion last year the high tech manufacturing Segment is at rupees 0.42 trillion as compared to rupees 0.07 trillion last year. Moving on to the order book, the order book is at Rupees 7.33 trillion as on December 25 and up 30% as compared to December 24.
In terms of composition, approximately 92% of the total order book is from the infrastructure and the segments while in terms of geographic mix 51% of the order book is from domestic market and 49% relates to international jobs. The breakdown of the domestic order book of rupees 3.76 trillion as of December 25 comprises central government jobs share being 12%, state government and local authority share at 22%, PSU or state owned corporations at 30% and private sector at 36%. It is worth mentioning here that the private sector share has risen meaningfully from 21% in March 2025 to 36% in December 2025, supported by strong traction in the thermal power sector, storage systems, residential and commercial real estate and emerging opportunities for building capacities in ferrous and non ferrous space out of the international order book of rupees 3.57 trillion, around 75% is from the Middle East.
With respect to additional details on order book, around 10% of the total order book is funded via bilateral and multilateral agencies. In addition, as of December 2025 slow moving orders constitute roughly 3% of the overall order book while Rupees 10 billion worth of orders were deleted during the quarter. Further details are available in the accompanying presentation slides. Coming to Revenues Our Group revenues for Q3FY26 stood at Rupees 714 billion, registering ay growth of 10% with international revenues constituting 54% of the total group revenues during the quarter. The growth in the high tech, manufacturing, energy projects and the IT and TS businesses drove the overall revenue growth.
The revenues from the projects and manufacturing business for Q3FY26 is rupees 523 billion, up 11% over the corresponding quarter of the previous year. Moving on to EBITDA margin, our group level EBITDA margin excluding Other income for Q3FY26 is 10.4% as compared to 9.7% in Q3 of the previous year. The improvement in EBITDA margin is primarily driven by operational efficiencies across businesses. The EBITDA margin in the projects and manufacturing business portfolio for Q3 FY26 is at 8.1% and shown an improvement almost by 50 basis points from 7.6% in Q3 of the previous year. This progress is in line with our assessment at the start of the financial year.
The details will be covered when I elaborate on the performance of each of the segments. Our recurring PAT for Q3FY26 at Rupees 44 billion was up by 31% on a Y and Y basis. The increase in recurring PAT is reflective of improved activity levels, operational efficiencies and efficient treasury management. Reported PAT for Q3FY26 is at rupees 32 billion dollars, down by 4% over Q3 of last year due to this one time material increase in provision for employee benefits on account of the new Labor Code legislation. The group performance P and L construct along with the reasons for major variances under the respective function debts is provided in the presentation.
Coming on to working capital, our NWC to sales ratio has improved from 12.7% in December 24 to 8.2% in December 25 mainly due to an improvement in the gross working capital to sales backed by strong customer collections during the last 12 months. Our group level collections excluding the financial services segment for Q3FY26 is rupees 642 billion vis a vis rupees 591 billion in Q3 of the previous year. With continued focus on customer collections, our cash flow from operations excluding Financial Services in Q3FY26 was at Rupees 79 billion as compared to Rupees 21 billion in Q3 of the previous year.
Our group cash flows excluding financial services has been given in the annexures and alongside the reported cash flows for the entire group to enhance the clarity on the cash flow movements. Finally, trailing twelve month return on equity for Q3 FY26 is 16.5% as compared to 16.1% in Q3 of the previous year and improvement of 40 basis points. The trailing twelve month ROE excluding the impact of this one time labor port provision stood at 17.6% broadly in line with the target of 18% that we have set ourselves to during this last year. That is FY26 for the Lakshya Plan.
Very briefly, I will now comment on the performance of each business segment before we give our final comments on our outlook for FY26. We start with the Infrastructure segment. The infrastructure order inflow grew 26% in Q3 FY26 on a Y on y basis driven by strong domestic private sector demand spanning residential and commercial buildings, semiconductor fab plants, data centers, minerals and metals, solar PV plants and transmission lines. These together account for nearly 55% of the domestic orders for the quarter. The order book of this segment is at rupees 4.24 trillion as of December 25th. The book bill for infra is around 26 months.
Like I mentioned earlier, our order prospects pipeline for infra for the near term is Rupees 4.02 trillion. Similar levels as compared similar levels as the same of December 24. This infra prospects pipeline of rupees 4.02 trillion comprises of domestic prospects of rupees 2.61 trillion and international prospects of rupees 1.41 trillion. The subsegment breakup of the total order prospects in infra comprises of transportation infra share at 19%, heavy civil infrastructure share of 19%, water and effluent treatment share of 18%, buildings and factories at 15%, power transmission and distribution 11%, renewables 9% and minerals and metals 9%.
The revenue for the quarter for the infrastructure segment registered a modest growth of 5% on a Y on Y basis. The domestic market saw subdued progress due to slowdown mainly in the water and effluent treatment projects business. However, the execution momentum remains strong in the international portfolio. Our EBITDA margin in the Segment was at 6.1% in Q3FY26 as compared to 5.5% in Q3FY25 with the uptick largely driven by stages of completion across projects. Moving on to the next segment that is Energy projects which primarily comprises of hydrocarbon and the carbon light solutions business, the order inflows in this segment were robust at Rupees 460 billion in Q3FY26 compared to Rupees 388 billion in Q3 of the previous year supported by ultra mega orders across both hydrocarbon and carbon light solutions.
During the quarter, the hydrocarbon’s offshore wind business secured an ultra mega order to supply offshore HVDC converter stations to a leading European renewable energy operator in the carbon light solutions business. We have received letter of award intent for an ultra mega order from a major Indian private sector utility operator. The order book of this energy segment is at rupees 2.48 trillion as of December 25th with the hydrocarbon order book at rupees 1.83 trillion and the carbon life solutions order book at rupees 0.65 trillion. We have an order prospects pipeline of rupees 1.66 trillion for this energy segment for the near term comprising of hydrocarbon prospects of rupees 1.26 trillion and carbon like solutions prospects of rupees 0.40 trillion.
The carbon light solutions order prospects are largely domestic whereas the hydrocarbon prospects are largely from outside of India. The Q3FY26 for the energy segment stood at Rupees 127 billion reflecting a steady 15% growth and underscoring execution progress on a larger order book. The energy Segment margin in Q3FY26 is at 5.9% as compared to 8.3% in Q3 of last year. The margin decline in the hydrocarbons business is primarily due to cost overruns in a few competitively priced domestic and international projects. As highlighted in previous earning calls, these projects are in their terminal execution phase and are expected to conclude over the next few quarters during which margins will remain soft.
This is already factored into our PM margin guidance for FY26. The carbon light solutions margin is reflective of a significant share of revenues from jobs which are yet to cross the margin recognition threshold. Moving on to the high tech manufacturing segment comprising of the precision engineering systems and heavy engineering businesses, the order inflows in heavy engineering moderated due to project deferrals. In the PES business the decline in order inflows was primarily on account of a high base in the previous year. The order book of this segment is Rupees 379 billion as of December 25th with the PEs order book at Rupees 315 billion and heavy engineering order booked at Rupees 63 billion.
Our order prospects pipeline for the near term in this segment is rupees 237 billion comprising of rupees 190 billion of precision engineering prospects and the remaining rupees 46 billion from heavy engineering business. The segment revenue at approx. Rs 33 billion registered a strong growth of 34% Y&Y driven by execution ramp up in the PES system business during the quarter, favorable job mix and operational efficiencies in the heavy engineering and aided segment margin improvement. Moving on to the next segment which is the IT and the Technology Services segment which this comprises largely of the two listed entities lti, Mindtree and LTTS and as well as our newly incubated businesses of digital platforms, data centers and semiconductor design.
The revenues for the segment is rupees 135 billion in Q3FY26 registering a growth of 12% on a Y on Y basis. Operational efficiencies and the forex tailwinds drives the segment margin improvement. I will not dwell too much on this segment as both the companies in the segment are listed subsidiaries and the detailed fact sheets are already available in the public domain. We move on to L and T Finance Ltd. Which is forming part of the Financial Services segment. Here again the detailed results are already available in the public domain. But very briefly the Q3 witnessed the highest ever quarterly retail disbursement and improved collection efficiency and as well as asset quality.
The financial services business has achieved 98% retailization of its loan book in December 2025. The return on assets remain healthy at 2.31% for Q3 FY26 and adequate capital is available in the balance sheet to pursue growth in the medium term. Moving on to the development projects segment, this segment includes the LNT Hyderabad Metro and the power development business comprising of the 1400 megawatt coal based power plant at Naba in Punjab within L and T Hyderabad Metro. The higher average fares following the May 25 fare hike contributed to the revenue growth and margin improvement with the average fare for passenger rising from rupees 38 in Q3FY25 to rupees to rupees 47 in Q3FY26.
The average daily ridership during the quarter stood at 4.14 lakh passengers as compared to 4.45 lakh passengers in the same period of last year. As a result of this, LNT Hyderabad Metro reported a net loss of rupees 1.85 billion in Q3FY2 as compared to a net loss of rupees 2.03 billion in Q3 of the previous year. As mentioned in the previous earnings call, L and T has reached an in principle understanding with the Government of Telangana for the acquisition of its entire stake in LT Hyderabad Metro. Under the proposed terms, the Government of Telangana will pay rupees 2000 crore towards L&T’s equity investment and assume the Metro’s entire debt of around 13,000 crore.
The decline in revenues of Nabapower was mainly on account of lower power demand while the margin improved due to cost efficiencies. I move on to the last segment which is others. This segment largely comprises reality industrial walls, construction equipment and mining machinery and rubber processing machinery. The segment witnessed robust order inflows during the quarter with LT Realty recording its highest ever presales in a quarter of approximately Rupees fifty billion. During this quarter LT Realty had a successful launch of its LT Green Reserve Noida project which recorded a Pre sales of rupees more than 40 billion in.
Its first week of launch. The segment revenue at rupees 25.9 billion recorded a 55% Y on Y growth primarily driven by higher handover of residential units in the reality business which also led to segment margin improvement. Before we conclude, let me cover the guidance on the various parameters for FY26 on order inflows. Our nine months order inflow has seen a strong growth 30% YNY and based on a strong capex momentum basis, the nine month performance and the healthy prospects pipeline for the near term we will be exceeding the 10% order inflow guidance for FY26 on revenue. The group revenue grew by 12% in nine month FY26 and is broadly in line with our estimates.
We expect the customary ramp up in project execution during Q4 and are reasonably confident of achieving our full year revenue growth guidance of 15% on margins. Our projects and manufacturing EBITDA at 7.9% for nine months of the current year is in line with the target that we have set ourselves at 8.5% for the full year FY26. Lastly, on working capital, we had earlier guided the net working capital revenue of 12% by March 26. However, with stronger collection intensity and improved contractual terms, our net working capital revenue has improved sharply to 8.2% as of December 25th and we expect to close the year with a revised target of around 10%.
With this I complete, now we can take Q and A. I also, as I indicated to you earlier, our Deputy Managing Director and President Mr. Subranvish Sharma will be also there in the call. It would be good that if you can put all the strategic questions before this call and take advantage of his presence, any bookkeeping questions, you can maybe take it towards the later part or you can connect independently with me or the IR team. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Good evening sir and congratulations on another stellar quarter. My first question is on the quad at the beginning of the fiscal. We are very, very positive on the QUAT prospects. Right? We understand a few orders have got cancelled. The question is, are you still positive for the next fiscal for Quat or coming quarters? Do you think? The second related question is that even if the project comes back, do you think this will come at a much l ower scope and size?
Parameswaran Ramakrishnan
Okay, this time I here. First of all, I think as we clarified in our earlier communication, these weight orders were not part of our order book. So I think. Let me clarify that. So nothing changes in terms of what is there for our quarter four order inflow, prospects, pipeline, etc. Etc. Having said that, yes, it is a bit of disappointment that that some of those projects where we were, where we had participated in the competitive bidding and where L1 have been sort of cancelled For a simple reason, that the budget they had for each of these projects, we always knew that when we are bidding that we are far above the budget. Something has gone wrong in their system and they were trying to get the additional funds, but I think that was becoming difficult for them. So they have canceled it. But these projects cannot be canceled because these are strategically important projects.
These are very important for maintaining their production as well as for meeting their targets. So they will come back. They already started working on it. There will be some minor tweaks, but. This will come back. And I think we are very positive that all of these tenders will be out this year, this calendar year, and they will get awarded this year. And since we had demonstrated our competitiveness in the previous bidding, I am positive that we will maintain our competitiveness in the forthcoming bid also. So nothing really lost, except that we have lost some time.
Mohit Kumar
Understood. My second question is on the revenue growth guidance. I think at the beginning of the year we’re given 15% revenue growth guidance. And given that the nine month revenue growth has been slightly around 10, 12%, do you think, are you still holding on the 50% revenue growth guidance?
Parameswaran Ramakrishnan
So Mohit, I think while I was concluding my presentation, I gave an update on the revenue guidance itself. Q4 has always been the most busiest quarter for the projects and manufacturing business portfolio. So we continue to retain our guidance of 15% for the full year. And we are reasonably confident that Q4, the way we have planned the execution momentum will be at a fast forward space both for the infrastructure, for all the segments in the projects and manufacturing space. That is baked in.
Mohit Kumar
Understood, sir. Thank you. And all the best, sir.
Parameswaran Ramakrishnan
Thank you.
operator
Thank you. Our next question comes from the line of Sumit Kishore from Axis Capital. Please go ahead.
Sumit Kishore
Good evening. Exceptionally strong performance on order inflows. And the working capital improvement is also quite remarkable. My first question is with oil hovering around 60, $65, what is your outlook on Middle east if oil prices remain at these levels? If it persists at this level, do you foresee any prospects getting pushed out? And also the second part of the question is if you can comment on the execution that we have seen in the quarter, specifically in hydrocarbons with such a large order backlog, maybe 11% for the quarter appeared a bit low.
I know we shouldn’t look at quarterly numbers, but still it appeared a bit low. And how long can the margin pressure in hydrocarbons specifically persist? While you have called out that it. Will be weak in second half of the fiscal, but how Long can this persist based on your evaluation of the hydrocarbon order backlog. Thank you. Hello. Hello. Am I audible?
Subramanian Sarma
You are audible. Sorry, Sarma here again I think yeah, I was talking about oil prices globally. Whatever is happening, I think it’s good that oil prices have held their price range around $60 $65 which is a positive development in my view and from every conversation I’m having with the senior executives of all these national oil companies I think everyone believes that the oil will be price range bound in that 60 to $65 and as such the capital allocation for the projects which are of interest to us will remain unaffected because if at all there is a drop in oil prices it will have an impact on some non essential projects.
But projects which are important for maintaining production and enhancing the production, they are pretty much well on track. So I don’t see any impact of the oil prices. I mean I said it is stable and even if there is a slight drop I don’t expect any significant impact on the pipeline of opportunities. That is one part. Second thing is that margins, Yes, I think there is some, like we have said it’s a portfolio project sometimes some projects it’s a pacing issue as well as some projects sometimes have some challenges. I expect hydrocarbon business to come back on full strength maybe two or three quarters from now.
Parameswaran Ramakrishnan
So Sumit, just to add I did emphasize that the margin guidance of 8.5 remains the effort for taking into account that we have had a good nine months despite the fact of hydrocarbon margins having moved southward this year as I stated earlier as Mr. Sharma also reiterated that we expect some of these, I would say stress projects to get close in the near term and margin should move northward hopefully next time after some quarters.
Sumit Kishore
Yeah, that was very clear. My second question is in relation to the subdued performance in the domestic infra segment in terms of growth mainly tracked down by water as you have pointed out. So is there any clarity on what is happening in water? How long can this drag sort of continue for the domestic intra business on growth? The next DFC is not going to get awarded anytime soon. The next rail is not going to come anytime soon. So what is the outlook for the domestic infra business?
Parameswaran Ramakrishnan
So I did mention Sumit that order prospects pipeline as we typically talk about is only for the balance period of the year. So as it stands now the prospects pipeline for infra which is for another three or four months still is at the same level and the more important thing it comprises of domestic prospects of 2.61 trillion and I reiterate the important thing in the prospects pipeline, especially for domestic is concerned is that we are now slowly looking at a higher share of private sector prospects. Of course there are certain large projects of the government which possibly should get announced maybe after the budget session is all done, but we are fairly certain that this year has been a good mix of both public and private order inflow in the domestic side that has helped us and that is something we believe we should continue into the near term.
Coming to the first part of your question, as far as water is concerned, yes, certain projects which have been under the central plan funded, some of these projects have faced headwinds in terms of fund allocation and to that extent I would say we have also calibrated our execution momentum in this segment to the extent of funds that we receive. Had this fund allocation been normalized, had we witnessed the growth of revenue in the infra segment would have been more.
Sumit Kishore
Thank you and wish you all the best.
Parameswaran Ramakrishnan
Thank you.
operator
Our next question comes from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Hi. So thank you for the opportunity. Again harping on the water business. So what was the kind of growth in intra as we can understand it was 5% for Q3 also because of the impact of water. If we exit that, what kind of growth was there in the X of water business in intra for 9m to 9m? And I can see there is still water opportunity you have highlighted in the prospects for infra roughly about 18% which is 65 to 70,000 more.
So are we looking for more conversion and all these orders which we are including in the prospects, how the terms are different than what currently we are executing and calibrating.
Parameswaran Ramakrishnan
So I think you had two questions Amit. So let me put it from a statistics perspective that suppose if the water segment was not there as part of the infrastructure portfolio then the revenue growth that we have demonstrated 5% on a growth it would have been actually a little more higher to almost 8 to 9% growth because we have consciously because of the projects not getting funded. So the execution momentum has come down and because of that the growth in revenue has been modest at the overall segment level as far as order prospects is concerned.
I did talk about 720 billion rupees of order prospects which is there for the near term depending on the type of projects and the underlying funding. We will be bidding according to what we feel should be the right way. But due care is being taken to ensure that we don’t get into blocked into working capital because of absence of Funding internationally. Right. One more point I wish to add. And in fact internally also we have split the water business into domestic and international and we are now putting a lot more focus on the diesel plants and water transmission projects that are coming up. Opportunities that are coming up in the Middle east largely. And we do believe that in the near term some amount of international water projects also would come up as an ordering opportunity for us.
Amit Anwani
Thank you sir. On PNM margin which you guided for 8.5% and you did highlighted that we have already factored in the cost pressure for pure legacy orders. So is it the correct understanding that we can be eyeing for Once these orders complete, As I said, 3, 4/4, we’ll be asking for a meaningful margin improvement since these orders would be out and new orders getting executed. So some color on. On medium term margin since we saw some improvement this quarter. But since legacy orders will be out, what is the things lying ahead in terms of margins?
Parameswaran Ramakrishnan
So Amit, I think it has been always our practice that we give guidance for all the major parameters for the year. Okay. And Mr. Sharma alluded to the fact that the hydrocarbon margins being subdued in the current year is because. Because of two, three projects both domestic and international. I also wish to assure you that these projects are at the final stages of completion. And hopefully the margin uptick would be seen sometime maybe after two or three quarters into the next year. But how much of that will add up to margin segment? Kindly wait till we close FY26 and taking the assessment because the budgeting for all the company will start in the next month or so. We should be in a better position to give you guidance for FY27 and beyond sometime in May.
Amit Anwani
Right. Lastly sir, on the media article of Chinese player probably getting allowed for the BTG orders. Any assessment you guys have done in terms of impact it could have if this is really happening.
Parameswaran Ramakrishnan
No, I think it is a little bit misplaced that concern because as we understand from the policymakers the elements of allowing Chinese players is not for the full equipment. It is only for certain components. In fact we had done that advocacy also to allow us to import some of the special alloys which are required for the thermal power plant which was not earlier allowed. So that I think is permitted. So in reality I think it does not affect impact. It still protects us. And we see a good positive opportunity unfolding in the next subsequent quarters with the thermal power plant with BTC being manufactured in India.
Amit Anwani
Understood sir. Thank you so much, sir. All the best.
operator
Thank you. Ladies and gentlemen, in order to the management is able to address questions from all participants in the queue. You are requested to please restrict yourselves to one question only. You may rejoin the queue if you have further questions. Our next question comes from the line of Aditya Bhartia from Investec. Please go ahead.
Aditya Bhartia
Hi. Good evening sir. So just wanted to understand about the Tenity order. How many packages have you already recorded until now? And how should we think about the opportunity going forward?
Parameswaran Ramakrishnan
Can you repeat that question, Aditya? Please.
Aditya Bhartia
Sir, about the Tenity order, I think there are six packages of that. Just wanted to understand how many packages would we have recorded until now? And is it fair to assume that all six packages would be coming to us as a replacement contractor? Or could others be also involved in this?
Subramanian Sarma
See, we have Sharma here again we have a framework agreement and like if you said correctly, we have 12 gigawatt. That means six packages of 2 gigawatt each. Currently what we have included in our order inflow and which will then generate revenue is 2 of those. And then we are in discussion with the third and fourth with the customers and we’ll have to see when it happens. When they call up then we will. We will advise you and we will include that in the order flow. So as and when they get called out, we will include that in our order inflow. But we have a potential for all six.
Aditya Bhartia
Yeah, understood sir. So. So does that mean that it is almost kind of confirmed that we’ll be getting the third or fourth packages or is there some negotiation that is how does it work?
Subramanian Sarma
No, it means that we have been selected for the whole program. Right. So but then there are certain. You. Know, timing wise the customer has to decide when he wants to call up which project. So we’ll have to wait. So but I think when they call up then we haven’t. We will have a secured position. But until ACE calls off we are as a prudent policy, we are not counting it.
Aditya Bhartia
Understood sir. Understood. And my second question is on the margin erosion that we have seen on the hydrocarbon side you mentioned that there are certain orders wherein we are seeing cost overruns. Just want to understand roughly which when would we have won these orders? Is it that competitive intensity was very different at that time and it has subsequently improved. So how you think the whole scenario out there?
Subramanian Sarma
Yeah, yeah. I mean see most of the projects which are a part of the legacy project in the portfolio, I mean secured during the COVID time or post Covid time. And then we had a huge Ukraine war issue and then we had bunching effect and I think Unfortunately, I think many things kind of coincided and we are getting through those. I mean I think one by one we are handing over like I said before, I mean two, three quarters we should be out of it.
Aditya Bhartia
Understood, sir. And just one last question. We are now getting some orders like Metro contract that we announced today. Some of the other orders are also of really large size. So is it fair to assume that execution timelines going forward would be longer than what we have seen historically?
Subramanian Sarma
Generally this, I mean this is kind of generalize this because every project will have its own timeline. And I mean they are in the range. So I think depends upon the complexity of the project. Some of them have too much of tunneling and boring. So then it will be longer and depends on how much the land has been already acquired. So there are various parameters to look at. I don’t think it will be appropriate to generalize. But they are all in the typical range.
Parameswaran Ramakrishnan
Just to add to what Sharmaji just now spoke, I did comment that the book bill infra order book is 26 months. That includes today’s press release of an order that was secured in the previous quarters. Okay. The average order book execution period for hydrocarbons is around 29 months. For the carbon like solutions it is around 48 months.
Aditya Bhartia
48 months. Perfect. Thank you so much, sir.
operator
Thank you. Our next question comes from the line of Mohit Pandey from Citi. Please go ahead.
Mohit Pandey
Yeah. Is on margins for the international portion of enc. In light of the commodity price movement. I understand steel is the most important commodity for us which has not seen as much price movement. But for the other commodities, how should. One think on the impact on the fixed price international orders that we have on the backlog?
Subramanian Sarma
Generally speaking, like you rightly said, I think our biggest exposure is on steel in terms of commodity mostly on the international project. And steel fortunately has been pretty stable. You know, there has not been much volatility at all in prattle if at all. There has been a little bit of a downward pressure, not upward pressure. And our risk is generally between the time we submit the bid till award. I mean that is the place, that is the time period where we are little bit exposed. Otherwise after we secure the Jabab, we try to one way or the other hedge either by placing the order quickly or doing some pre engineering and placing the orders or having some pre bid agreements.
So I am not expecting major exposure to the commodities. Except copper and nickel has been little bit volatile. But that again we will have a policy of hedging as quickly as Possible. And we also allow some contingency in our estimate. We know how the fluctuation is. Unless like Ukraine kind of thing, Ukraine, Russia, war kind of situation happens. I think rest of the volatility we are able to manage.
Mohit Pandey
Understood, sir. And specifically on the renewables in the Middle east, given silver tends to be an important part there, how to think about that?
Subramanian Sarma
No, renewable contracts. I think most of the price risk we have already naturally, as we have passed it on to the customer. We had one issue a couple of years back. After that we have taken a very practical approach or a prudent approach, we have passed on that risk to the customer. So all our renewal projects we are subjected to very limited risk in terms of commodity.
Parameswaran Ramakrishnan
On the execution risk, no material prices.
Subramanian Sarma
Yes, yes.
Mohit Pandey
Yeah, yeah, understood, sir. Sir, and secondly, just a clarification. So the 3% also I think some.
Subramanian Sarma
Of the large contracts you secured from Qatar and all has also got designated item, which means that some of the price risk is with the customer. Even in international contracts we are seeing a trend where the customer is willing to accept some amount of price risk, but not all items, but for certain items which are more like what I would say, volatile.
Mohit Pandey
Understood, sir. Secondly, a clarification on the slow moving parts of the backlog, the 3% that was mentioned, that would be primarily water projects. Is that understanding, right?
Parameswaran Ramakrishnan
Yeah, it’s a combination of largely water projects. Of course there are certain projects that we secured last year, but the right of way clearances has not been provided. So consequently they have been classified as slow moving. But I wish to tell you it is not a source of worry at this juncture.
Mohit Pandey
Okay All right, sir, thank you so much and wish you all the best.
Parameswaran Ramakrishnan
Thank you.
operator
Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to one question only. You may rejoin the queue if you have any further questions. Our next question comes from the line of Puneet Gulati from hsbc. Please go ahead.
Puneet Gulati
Yeah, thank you so much and congrats on great numbers. My first question is on the Middle Eastern order book. Assuming oil prices remain where they are, you foresee a potential for higher project offering into this year calendar 26th and this fiscal 27th. And also, how do you think about your market share in Middle East? Do you see more room for it t o grow from where you’ve already reached?
Subramanian Sarma
Generally speaking, I think the overall atmosphere is quite positive. There is a strong pipeline of opportunities and various countries within the Middle east like with this Saudi, Qatar, UAE and also in Kuwait will come back again as I spoke earlier. So we Are, yes, we are seeing like there’s a good momentum there and we have a good presence. And I think in terms of market share, we are ourselves bit selective depending upon the type of project and our competitiveness and also the terms of the contract. Overall we are maintaining a decent share.
Puneet Gulati
Okay. And on the private sector, orders have increased. Do you foresee higher margins and better working capital control there?
Subramanian Sarma
Generally, I think yes. Private sector by, you know, if you in comparison to public sector are more favorable to working capital, payment terms are always a little bit more favorable. There is more flexibility when we are n egotiating shorter milestone events.
Puneet Gulati
Okay, that’s all. Thank you so much.
operator
Thank you. The next question is from the line of Bharani V from Avendis Park. Please go ahead.
Bharanidhar Vijayakumar
Am I audible?
operator
Yes, you are audible, sir.
Bharanidhar Vijayakumar
Yeah, yeah. So on this domestic prospect of 2.61 trillion, how much would the private be part of it?
Parameswaran Ramakrishnan
Sorry, can you repeat that question?
Bharanidhar Vijayakumar
of the domestic prospect we mentioned now of 2.61 trillion, how much will be private?
Parameswaran Ramakrishnan
Roughly around 35%.
Bharanidhar Vijayakumar
Okay. Related to domestic prospects and overall infrastructure prospects which has been flat. We have been strong in the past. In segments like heavy civil, of course, water and even transportation infra. But right now, of course water is slowing down and we are not very confident on the domestic prospects on transportation infra, ABC win, etc. So what is our likely outlook for these segments for FY27? Of course we will continue to do. Well on private and on Middle East. But just Your thoughts on FY27 outlook and order inflow from our traditional stronghold data areas, especially in India.
Parameswaran Ramakrishnan
So Bharani, if you track the domestic order inflows in last year also actually we had a drop. Okay. But I think that’s the credit of our business model that if certain segments for whatever reason there is a pause. Okay. There are other segments which we cater to is showing a revival in so far as infrastructure segment is concerned. Domestic we have seen sustained traction coming back in B and F and minerals and metals. So if there has been of course water projects, prospects are there. But given the payment terms and the conditions and all, we have been a little more careful in pursuing those opportunities. But the fact is that there are two other segments which are seeing a clear case of revival. And we feel that this revival will potentially have a. I would say will offset some of the muted or subdued opportunities in very large heavy civil and transportation transportation intra projects.
But we do believe that the government in the maybe in the first February budget announcement will kick start the growth momentum back into Taking large projects and that will hopefully compensate for the subdued business conditions insofar as capex is concerned. But private sector is showing distinct revival in many sectors which I also highlighted during my earnings presentation.
Bharanidhar Vijayakumar
Okay, my second question is on the new ventures like electrolyzers, data centers, batteries and semiconductors. Can you update on what has been the capex so far in each of these segments and what more would happen? Or in some sense what are the total capex expected and how much we have already done in these?
Parameswaran Ramakrishnan
Okay, so as of now we have almost 32 megawatts of capacity of data center out of which 14 megawatts is up and running. Another 18 megawatts will get commissioned by the end of this fiscal year. The total CAPEX investment in the data center is luckily in the range of thousand odd crores. Okay. And so far as semiconductor is concerned, most of the expense that we are doing is still on what you call the investments into creating design LED semiconductor chips. Okay. We are in touch with the multiple sectors in this particular segment customers and whatever spend is happening, most of that is actually getting washed through the P and L itself for both semiconductors. And as far as electrolyzer is concerned, we have already actually made a perfect design of a more or less 100% indigenous 4 megawatt stack. We are now slowly upgrading it to 8 megawatt and megawatt stack and we do expect a lot of opportunities to come in the near term.
Bharanidhar Vijayakumar
Okay, I’ll take it above. Thank you.
operator
Thank you. The next question is from the line of Atul Tiwari from JP Morgan. Please go ahead.
Atul Tiwari
Yes, thanks a lot and congrats on great set of numbers. So just one question on thermal power opportunity over past one year, obviously your orders have also benefited a lot from thermal power project. So as of now, you know, over. Next two, three years, how many gigawatts of the total market size you see in the pipeline from states and the central and the private.
Subramanian Sarma
Yeah, I mean I think the. Yeah, it’s a bit pleasant surprise for us also that how the market is developing in the thermal power plant and it’s been good news for us and we booked quite a bit of orders and going forward we believe that overall I think the country will still add about maybe 15 to 20 gigawatts in next two years or so. We will still see a 4 to 5 gigawatt opportunity for us as a minimum in the coming years.
Atul Tiwari
What proportion of the total outlook today will be at fixed price and what proportion will have a price variation clause of some kind or other. Hello.
operator
Sir, if you’re speaking, you are not audible at the moment.
Parameswaran Ramakrishnan
Sorry. What I meant is that the fixed price constitution of our order books is in the range of 55 to 45%. 55 to 45.
Atul Tiwari
Thank you. Thank you.
Parameswaran Ramakrishnan
55% is fixed price. 45% is variable.
Atul Tiwari
Okay. Okay. Thank you.
operator
Thank you. Our next question is from the line of Priyankar Biswas from JM Financial. Please go ahead.
Priyankar Biswas
Thanks for the opportunity and congratulations to the team. So my first question is. What I understand is that you have previously highlighted there was a significant like in the past call as well that there was a significant drag down due to the monsoon particularly extending even well into the 3Q as well. So had it been let’s say a relatively normal monsoon and leaving the water part aside. So what could have been. What is the amount of work that. You may have lost in the domestic space? So in terms of execution.
Parameswaran Ramakrishnan
So Priyankar, in fact in the month of October itself I did mention that October also could see some amount of slippages. Given the fact that the monsoon in some parts of the country where we are having projects got extended. Correct. This. I think I clearly remember this. But I wish to tell you Q4 we believe. I mean I don’t think there are any events that climatic events that are disruptive. So consequently we do see a normative Q4 for almost all the segments be domestic or international.
Priyankar Biswas
So what I meant is like because of this let’s say monsoon drag. So let’s say had it not been there in this Q3 what sort of growth maybe we could have achieved. If you can give some color.
Parameswaran Ramakrishnan
It’s extremely difficult, Priyanka to talk about 5% growth that we had in infra segment for Q3. Whether how much that would be. I don’t think it’s not. It’s not possible to put a number to that.
Priyankar Biswas
If I just squeeze one more in. So like I understand that two packages for you offshore HBTC were booked in this particular quarter. So what would be the rough quantum of that?
Parameswaran Ramakrishnan
It’s ultra mega. So it’s a ultra mega forest is more than 15, 000 crore equivalent.
Priyankar Biswas
Okay. Okay. Okay. So and like since you have given the prospects as well for hydrocarbons. So like for this three and fourth which you are in discussions, are it. There in this year’s prospect or should we be thinking of it more from. A next year prospect? Next year?
Parameswaran Ramakrishnan
Next year nothing in Q4. It can happen yearly next year.
Priyankar Biswas
Yeah. Thank you sir. Extremely clear.
operator
Thank you. Our next question is from the line of Amit Mahavar from UBS. Please go ahead.
Amit Mahawar
Yeah, thank you. I just have two quick questions. First is on Middle East. Now we basically by far have the best competitive position that we had in last, you know, more than 15, 20 years in Middle East. Do you think next two years significantly the competition for Korea and particularly Europe stroke us can come back any color there. And if you can help us understand next two years, if on the PNM and core, you know, share of Middle east is going to be more than maybe 50% in next two years, that’s for sure. Thank you.
Subramanian Sarma
Competition. We have been operating in the same environment for the last few years. Chinese are there, Koreans are there, Europeans are there. Sometimes even for smaller contracts we have the locals. So I think landscape in terms of competitiveness is not changing much. On the contrary, I would say that we have established ourselves quite well. Customers prefer us to win the jobs and sometimes even the competitors are coming and seeking partnership with us. So I don’t think nothing has much changed. It will remain pretty much the same, if at all. It will be a little bit positive for us in the next two years.
What was the second question you said?
Amit Mahawar
The share of core top line pnm.
Subramanian Sarma
I think it’s very difficult to put a number because it depends on what happens in the Middle east in relation to what happens in the domestic. I mean, I think the good news is that I think we are growing well and we’ll continue to grow. I think we are very confident about it.
Amit Mahawar
Very, very fair. And second, quick question is if the current slowdown in some segments in domestic market, particularly water transportation, sustained for the next one and a half year, do you see the risk of, you know, not exactly like the COVID risk, but the time cost delays which are difficult to pass on next year if it improves, I understand, but if it sustains for the next one year, we will have to evaluate it s harper, sir. That’s it. Thank you.
Subramanian Sarma
We do not think that water change will last that long. I mean, this should get resolved. It is a bit unfortunate that there has been some kind of suspension of the work in those areas because of the payment issues. But. But we are continuously in dialogue with the government and maybe within a quarter that should get unlocked and things should start moving. So I don’t think we should draw any different conclusions from that.
Amit Mahawar
Thank you and good luck.
operator
Thank you. Our next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Pulkit Patni
So thank you for taking my question. So my first question Is I understand the impact of a depreciating rupee on your services business. How should we understand the impact of a depreciating rupee on your core EPC business in light of margins? I mean just some broad guidelines would be helpful. That’s question number one.
Parameswaran Ramakrishnan
So should I take it now or you’re going to put another question also?
Pulkit Patni
Okay, my second question is similarly, while we understand that you know, you hedge commodities, etc. But even in the commodity market the movement has been quite drastic in the last couple of months. So are we able to hedge all. Of that or we could expect some bit of negative impact of that in the next say couple of quarters or so. Those are the two questions.
Parameswaran Ramakrishnan
Okay, so the first part I will respond as far as FX risk is concerned, Pulkit, I think you never heard from us. At least I can recall never have ever commented that our margins are up or down because of exchange rate variations. Because it is because of the very proactive and timely hedge practices that we do to ensure that project risks are covered at least for financial risk part that is on the exchange rate side. So as and when the projects are secured and if their international projects or even domestic projects having lot of forex outflows, we have a mechanism by which we are able to cover the contracts at the rates at which they were estimated by bidding for the project.
And that is how it is being done. So we have not in fact even for the ITTS companies, some part of the exchange rate depreciation has flown into their P and L. But also I would like to said they also have a layered hedging process and that process has been consistently followed to ensure that the margins are not substantially impacted by adverse exchange rate movements. The same applies for the project part of the business as well. Now coming to commodity prices, Mr. Sharma did allude to steel and other places, but I think he will respond.
Subramanian Sarma
Yeah, I think like I said, you have to understand that when you are bidding for these jobs we do quite a bit of substantial amount of pre bid engineering work. So we have a reasonable amount assessment of the quantities. So like I said, I think our open exposure is only for the bid submission to bid award date. I mean if you are successful. And so once we are awarded then we based on the different commodities and their volatility, we go and hedge those commodities based on the estimates we have already done. Now what could be left unhedged portion could be maybe 5, 10% as part of the engineering development. I mean but that is not very significant because that Gets covered through contingency.
Pulkit Patni
Sure, sir. So these high commodity prices right now is something that you are not that worried about?
Subramanian Sarma
No.
Pulkit Patni
Perfect. Thank you so much.
operator
Thank you. Our next question comes from the line of Aditya Mongia from Kotak. Please go ahead.
Aditya Mongia
Thank you for the opportunity. I limited to one question. Mr. Halma. You talked about certain projects that you win are more strategic in nature. If I were to be kind of thinking through your entire overseas ordering that. Has happened, let’s say in the last. One year, how much of those would you classify into areas which are more strategic for your customers? I’m just trying to get a sense. Of what part is then remaining which is at risk in case electric road moves further down. Just trying to get a sense of. Your exposure to strategically important excess projects leading the last 20 on the overseas side.
Subramanian Sarma
Actually, in fact, if you look at it, what we have won. I mean most of the international projects are in the oil and gas sector. It is in the renewable sector. And some of them are now in the critically important infrastructure like data centers and things like that. And I would classify them, all of them are very strategically important. I mean, and they are not going to be sort of impacted by. The Oil prices because oil and gas projects as I said, will continue regardless of where the oil prices are. And renewable projects and the data center projects are deliberate plan of all these countries to gradually invest to prepare themselves for the energy transition. So I think they are also building up their alternative energy portfolio in a very calibrated way. So all of them are very strategic. We are not in those. See only those non strategic projects are some highway projects, some motorway project, some beautiful building, some aspirational building or some tourist center development. We are not involved in any of those.
Aditya Mongia
That clarifies. Thank you so much.
operator
Thank you. That was our last question. Ladies and gentlemen, I would now like to hand the conference over to Mr. P. Ramakrishnan for closing comments. Over to you, sir.
Parameswaran Ramakrishnan
Thank you everyone for attending this call at the late hour. It was a pleasure to interact with all of you. Good luck and wishing you all the very best. Thank you.
Subramanian Sarma
Thank you.
operator
Thank you on behalf of Larsen & Toubro, that concludes this conference. Thank you all for joining us. You may now disconnect your lines .