L&T shares rise over 2% as Goldman Sachs upgrades to Buy. Check target price, upside

Shares of Larsen and Toubro (L&T) rallied as much as 2.5% to their day’s high of Rs 4,109 in morning deals on December 12 after Goldman Sachs upgraded the stock to Buy from Neutral and raised the target price stating positive levers of growth in the coming quarters.

With a price target of Rs 5,000, the international brokerage implies an upside potential of 25% current market levels. The previous target price given by the brokerage was Rs 3,730 per share. Goldman Sachs cited stronger growth visibility across business segments as one of the biggest triggers for the upgrade. The brokerage said L&T is well-positioned to leverage its capabilities into new opportunities that could drive a re-rating, supported by a healthy order backlog, low working capital needs and improved capital allocation.

It expects margins to strengthen through the FY28–30 execution cycle, aiding earnings growth. Goldman also highlighted the company’s rising presence in defence, green hydrogen and nuclear power, projecting these verticals to contribute 15% of order inflows by FY35, up from about 4% currently. With confidence in the domestic capex recovery, the brokerage sees L&T delivering low double-digit revenue growth and mid-teens PAT growth over the next five years, offering clear visibility in the near, medium and long term.


L&T Q2 performance snapshot

The company reported 16% YoY growth in its consolidated net profit at Rs 3,926 crore in the second quarter on top of a 10% jump in its revenues at Rs 67,984 crore.

EBITDA for the quarter improved 7% YoY to Rs 6,806 crore, while margins declined slightly to 10%. "The company has reported a well-rounded financial performance across all parameters. Our ability to repeatedly secure large orders, across segments and geographies is a true testimony to the Company’s leadership position in the EPC domain," said S N Subrahmanyan, CMD, L&T.

The company bagged orders worth Rs 1.15 lakh crore during the quarter, which is a jump of 45% YoY, helped by a strong order momentum across a broad spectrum of businesses.

At about 9:45 am, shares of the company were trading at Rs 4,082, higher by 2.24% from the last close on the BSE. L&T shares are up 12% since the beginning of the year.

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