Perennials utilize complex adaptive strategies and molecular mechanisms to cope with water-deficit conditions. Hence, to gain molecular insights regarding the water-deficit stress, two-year-old coconut seedlings of the varieties Kalpa Sree and Kalpatharu were subjected to soil water-deficit regimes (25% of available of soil moisture and control). Biochemical, physiological and growth parameters underlying water-deficit stress revealed the differential enzymatic anti-oxidants, lipid peroxidation status and water use efficiency trait between the genotypes investigated. The whole plant water use efficiency at control condition was significantly low in Kalpatharu (4.06) compared to Kalpa Sree (4.74). Nevertheless, under severe stress [25% ASM] Kalpatharu exhibited highest WUE (5.68) as against dwarf variety Kalpa Sree (3.84). Furthermore, the leaf transcriptome profiles of the control and water-deficit stressed seedlings were examined utilizing paired-end RNA-Seq. In total, ~7300 differentially expressed genes have been identified between the seedlings under water-deficit stress and control. Analysis of control and stressed Kalpasree leaf transcriptome showed significant upregulation of PHLOEM PROTEIN 2-LIKE A1-like, WRKY transcription factor 40 isoform X1 and downregulation of glycerol-3-phosphate acyltransferase 3 transcripts. On the other hand, upregulation of transcripts encoding polyamine oxidase, arabinose 5-phosphate isomerase among others and downregulation of aquaporin PIP1-2 transcript was documented in Kalpatharu leaves. Besides, long non-coding RNA and genic SSRs were also identified from the transcriptome data to further enrich the genomic resources of coconut palm which would pave way for its utilization in developing climate-smart coconut crop. The implication of this study in molecular dissection of the adaptive response of coconut to the soil-water deficit is also discussed