* Top engineer's Q4 net 27.23 bln rupees, beats analyst view
* Executive Chairman sees domestic upturn after Modi election win
* Sees 15 pct revenue growth in 2015
* Company plans IPO of two units in 2016 (Adds details)
By Aman Shah and Tommy Wilkes
MUMBAI/NEW DELHI, May 30 (Reuters) - Larsen & Toubro Ltd (L&T), India's biggest engineer, said on Friday it expected a gradual recovery in domestic demand this year, aided by government efforts to fast-track stalled projects that will help its new orders grow by a fifth.
Seen as a bellwether of the Indian economy, the firm has spent the past few quarters bolstering its business of building roads, trains, ships and power plant equipment by expanding overseas to offset weaker demand at home.
India's new Prime Minister Narendra Modi stormed to power in elections earlier this month promising to address an economic slowdown and a big backlog in infrastructure projects that stalled because of bureaucratic hurdles.
L&T's executive chairman said on Friday that he saw improvements in India's economy coming "sooner than what I had earlier thought", and predicted growth of 5.5 percent in the current fiscal year from below the current sub-5 percent.
"There is an all-round change in the mood and the atmosphere. I hope that the government lives up to what is expected by everyone," A.M. Naik told a media briefing.
But he cautioned about optimism for a dramatic turnaround.
The impact of the government's pledge to speed up projects would not be seen until at least August or September, and overseas orders would provide much of an expected 15 percent rise in revenues this year, he said.
L&T's order book - a third of which comprises international business - grew 13 percent year on year in the fourth quarter.
L&T outstripped analyst forecasts with a 69 percent rise in fourth-quarter profit, thanks to a steep gain in revenue from its infrastructure and heavy engineering businesses, and a gain from a divestment.
Net profit from continuing operations reached 27.23 billion rupees ($461 million) in January-March from 16.1 billion rupees a year earlier, L&T said in a statement. Gross revenue rose 11 percent.
The profit result compared with the 16.15 billion rupees mean of 15 analysts, according to Thomson Reuters data.
The company will start the process of listing two of the company's units - L&T Infotech and L&T Technology Services - in July 2016, Naik said.
Naik said L&T was well positioned to take advantage of the new government's proposal to open the defense sector to private companies, especially in shipbuilding, field guns, missile launchers and defense electronics.
Shares of L&T, which have jumped almost 50 percent this year on hopes of post-election economic reform, closed 0.27 percent lower ahead of the release, compared with a flat benchmark index .
$1 = 59.0150 Indian Rupees Editing by Christopher Cushing and John Stonestreet