Analysts remain bullish on L&T, see up to 16% upside on order book strength

ET Intelligence Group: Shares of Larsen & Toubro (L&T) have declined 3.6% over the past month amid broader market volatility. However, analysts remain bullish on the stock, projecting 13-16% upside from Friday's closing price of ₹3,915, supported by the company's record order book of ₹7.8 lakh crore as of June 2026, robust capital expenditure demand and a growing presence in the offshore wind segment. While geopolitical tensions and logistics disruptions in West Asia affected execution during the June 2026 quarter, L&T said no major projects had been cancelled. It expects execution momentum and order inflows to improve in the second half of FY27.

The company reported a year-on-year decline in earnings before interest, tax, depreciation and amortisation (EBITDA) and a contraction in EBITDA margin for the June quarter, owing to slower execution in project businesses and foreign-exchange headwinds in its IT subsidiaries. Despite the margin pressure, analysts expect the strong order book and continued momentum in fresh project wins to support margins. Order inflows are being driven by robust domestic private-sector demand, large infrastructure contracts and ultra-mega offshore wind orders from Europe. International projects account for 52% of the current order backlog, highlighting L&T's increasing geographic diversification.

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Domestic private-sector investment is expected to remain a key growth driver, particularly across industrials, buildings and factories, metals and minerals, energy, and real estate. The company also continues to gain traction in overseas markets, especially the Middle East, where investments in hydrocarbons, energy transition and infrastructure remain intact despite recent geopolitical disruptions. L&T has identified a prospect pipeline of nearly ₹15 trillion for the remaining nine months of FY27, providing strong visibility for future order inflows.

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The company has maintained its FY27 guidance of 10-12% growth in both revenue and order inflows, despite the challenging operating environment. Analysts believe execution should improve as logistics bottlenecks ease and recently awarded projects move into higher execution phases. Improved collections, particularly in the water and effluent treatment business, are also expected to support working-capital efficiency and profitability in the coming quarters.

L&T has undertaken portfolio-optimisation initiatives, including the divestment of Nabha Power and the sale of its stake in Hyderabad Metro, which may be completed by September-end. These moves would allow the company to focus more on its core engineering and technology-led businesses. Under its Lakshya 2031 strategy, L&T is also investing in newer growth areas such as green energy, digital technologies, semiconductors, data centres and advanced manufacturing.