No stock data available
L&T shares in focus amid Middle East crisis: Brokerage firm, Citi, retains its BUY rating on Larsen & Toubro (L&T) but lowers its target price to Rs 4,450 from Rs 4,810 as it takes a balanced view of short-term geopolitical risks in the Middle East (ME) against the solid domestic business fundamentals.
The current geopolitical environment in the Middle East portfolio of L&T is unfavourable, which accounts for 34 per cent of 9MFY26 consolidated revenue, as per Citi estimates, translating into a 4 per cent impact on FY27E consolidated revenue.
Nevertheless, the breadth of the domestic franchise of L&T remains a resilient earnings pillar, with the domestic business remaining the definitive proxy for upside in India’s medium-term infrastructure and industrial buildout.
L&T Stock in Focus: Citi cuts target but maintains ‘BUY’ rating – Key highlights
Limited EPS Impact: Assuming that ME disruptions are contained within a three-month window, Citi estimates that the impact on L&T’s consolidated medium-term EPS path would be limited.
Domestic growth buffer: Strong domestic execution and order backlog provide stability and growth visibility.
Balance sheet strength: Larsen & Toubro’s improving balance sheet supports operational flexibility and mitigates near-term risks.
Segment diversification in ME: The company’s exposure in the Middle East is diversified across hydrocarbon offshore, hydrocarbon onshore, power T&D, and solar EPC projects.
Operational Resilience: In the case of large offshore projects, initial design and fabrication are done in India. Alternative logistics routes are used to ensure that project timelines are maintained.
Citi views L&T as well-positioned to navigate near-term ME challenges while continuing to capitalise on India’s long-term infrastructure opportunities.
The revised target price of Rs 4,450 incorporates ME-related risks but underscores confidence in the domestic franchise and improving financial position.
L&T Stock in Focus: Motilal Oswal maintains ‘Buy’ call, despite target cut
Earlier, Motilal Oswal maintained its ‘Buy’ rating on Larsen & Toubro (L&T), while trimming the target price to Rs 4,400 from Rs 4,600, citing evolving global uncertainties and emerging structural shifts in some of the company’s key businesses.
As per the brokerage, the investment thesis of L&T is gradually evolving from the conventional ‘sum of the parts’ model to a ‘moving parts’ narrative as the outlook of the core as well as the subsidiary business is impacted by a number of factors, both external and industry-specific.
A key area of concern highlighted by Motilal Oswal is the constantly evolving geopolitical environment in the Middle East, which remains an important region for L&T’s engineering, procurement, and construction (EPC) operations.
The brokerage noted that the company’s international business contributes the majority of revenue within its core EPC (Engineering, Procurement, and Construction) segment, making the order pipeline and execution outlook sensitive to geopolitical developments in that region.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
