Buy Larsen and Toubro; target of Rs 4766: Prabhudas Lilladher

Prabhudas Lilladher's research report on Larsen and Toubro

Larsen & Toubro (L&T) reported consolidated revenue growth of 10.4% YoY, while EBITDA margin contracted by 32 bps YoY to 10.0%. Execution challenges in the Water projects and prolonged monsoons weighed on progress in Infrastructure projects, whereas robust execution across Energy Projects and Hi-Tech Manufacturing supported overall growth. Order prospects remain strong at Rs10.4trn for H2FY26, driven primarily by Infrastructure and Hydrocarbon opportunities. L&T’s potential strategic entry into electronic manufacturing services (EMS) and its partnership with BEL for India’s fifthgeneration AMCA program underscore the company’s focus on diversification and leveraging emerging growth avenues. Furthermore, sale of loss-making Hyderabad Metro is anticipated to improve L&T’s balance sheet and profitability. During the quarter, the award of two ultra-mega orders in the onshore and offshore Hydrocarbon business further strengthened its position and reinforced management’s confidence in achieving its guidance of ~10% YoY order inflow growth along with ~15% revenue growth and Project & Manufacturing (P&M) margins of ~8.5% in FY26.

Outlook

We roll forward to Sep’27E and maintain our ‘Buy’ rating valuing the core business at a PE of 22x Sep’27E (25x Mar’27E earlier) arriving at a SoTP-derived TP of Rs4,766 (Rs4,144 earlier).

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Larsen and Toubro - 30102025 - prabhu