Larsen and Toubro · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
Supply chain disruptions in the Middle East, particularly affecting Energy Green segment (solar projects in GCC), have led to execution delays. Offshore project dispatch from Qatar is scheduled for Q1 calendar 2027, and extended conflict could materially impact timelines and trigger cost escalation claims.
Elevated ECL provisions were recognized in Q1 due to aging receivables in the water and effluent treatment business, stemming from JJM funding delays. Management expects reversals as collections improve, but timing remains uncertain.
Analyst questioned progress on MAV RFP and MQ-9B drone program (JV with General Atomics). Management declined to provide updates beyond stating the bidding process is ongoing, leaving timing of potential large defense awards unclear.
Analyst raised concern reconciling ECL provisions with robust working capital improvement. Management clarified provisions relate to legacy water projects with delayed collections, representing timing difference rather than fundamental credit deterioration.
