Brokerage bets on Larsen & Toubro; stock climbs nearly 3%, more gains coming?

L&T Share Price: Shares of Larsen & Toubro (L&T) moved higher in afternoon trade on Thursday, recovering from the sharp fall seen in the previous session amid concerns over escalating geopolitical tensions in the Middle East.

At around 1:03 pm IST, the stock was trading at Rs 3,996.20, up Rs 113.60 or 2.93 per cent from the previous close on the National Stock Exchange of India. The rebound comes after the engineering and infrastructure major’s shares had dropped nearly 12 per cent earlier as global markets turned risk-averse following the Iran–US–Israel conflict.

Market participants said the rise in the stock reflects a technical bounce after the steep correction, with investors stepping in to accumulate the stock at lower levels.

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Middle East exposure remains a key concern

Brokerage firm Jefferies noted that global engineering and construction companies with exposure to the Middle East, including L&T, have declined between 10 per cent and 24 per cent since the Iran–US–Israel conflict escalated.

According to the brokerage, nearly 37 per cent of L&T’s order book comes from the Middle East, with Saudi Arabia contributing more than 75 per cent of that regional exposure. This has raised concerns about potential disruptions to project execution if tensions persist.

Jefferies estimates that a one-month halt in project activity in the region could impact FY26 estimated earnings per share by around 6–8 per cent.

Reflecting these risks, the brokerage maintained its “Buy” rating on the stock but cut its target price to Rs 4,500 from Rs 4,715.

Strong order book supports long-term outlook

Despite the near-term uncertainty, analysts remain constructive on the company’s fundamentals. L&T continues to maintain a strong order pipeline across infrastructure, engineering and energy projects.

In a regulatory filing dated February 25, the company said its Power Transmission and Distribution vertical secured “major” EPC orders in India and overseas markets. Under L&T’s internal classification, such orders typically range between Rs 5,000 crore and Rs 10,000 crore.

Brokerage firm CLSA also remains positive on the stock and has maintained an “Accumulate” rating with a target price of Rs 4,842, noting that the recent correction has made valuations more attractive.

The brokerage believes that once geopolitical tensions ease, L&T could see a relatively sharp recovery supported by its strong order backlog and improving domestic capital expenditure cycle.

New growth areas

Experts also noted the potential growth areas for the company in new emerging sectors like defence manufacturing, green hydrogen and nuclear power projects. These sectors are likely to contribute to order inflows over the coming years.

At the same time, improving margins between FY26 and FY28 could support earnings growth, particularly if execution remains steady and domestic infrastructure spending picks up.

Stock performance snapshot

At the current price of Rs 3,996.20, L&T’s market capitalisation stands at around Rs 5.47 lakh crore. The stock is trading at a price-to-earnings ratio of about 33.6.

For perspective, the stock’s 52-week high is Rs 4,440, while the 52-week low stands at Rs 2,965.30.

While geopolitical tensions in the Middle East may keep volatility elevated in the near term, analysts say the company’s diversified order book and strong execution track record could help it recover once the situation stabilises.