Buy L&T shares at a discount? Stock down 7.5% amid Middle East crisis, but brokerages see up to 30% upside

Shares of Larsen & Toubro fell sharply on Wednesday, emerging as the biggest loser on both the Nifty 50 and the BSE Sensex amid concerns over its exposure to the Middle East.

The stock declined 6.8 per cent to Rs 3,790 during the session. On the NSE, it was trading at Rs 3,801.60, down 12 per cent over the past five days. The stock is now about 14.24 per cent below its 52-week high of Rs 4,440.

The weakness follows rising geopolitical tensions in the Gulf region, which analysts say may impact margins due to the company’s significant presence in the area.

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Larsen & Toubro Order Book

At the end of the third quarter of FY26, L&T’s consolidated order book stood at Rs 7,33,161 crore, up 30 per cent year-on-year. International orders accounted for 49 per cent of the total order book, with the Middle East contributing 37 per cent. This translates into around Rs 2,71,315 crore worth of orders from the region.

Domestic orders formed 51 per cent of the total order book, while the rest of the world contributed 12 per cent. The company operates in more than 50 countries across engineering, procurement, construction, manufacturing and services.

In the third quarter of FY26, L&T reported order inflows of Rs 1,35,600 crore, up 17 per cent from Rs 1,15,900 crore in the year-ago period.

Of this, the Middle East accounted for Rs 44,800 crore, India Rs 68,800 crore, the US and Europe Rs 20,300 crore, and the rest of the world Rs 9,500 crore.

For the nine months ended December 31, total inflows rose 30 per cent year-on-year to Rs 3,45,800 crore from Rs 2,67,000 crore.

The Middle East contributed Rs 12,700 crore to energy projects and Rs 20,500 crore to infrastructure during the period. The company has indicated a prospective pipeline of Rs 5,90,000 crore, with significant opportunities in the Gulf region.

On the financial front, L&T reported a 4.2 per cent decline in consolidated profit after tax for Q3 FY26 at Rs 3,215 crore, compared with Rs 3,359 crore in the year-ago period. Revenue from operations rose to Rs 71,450 crore from Rs 64,668 crore. Total expenses increased to Rs 65,729.76 crore from Rs 60,302.62 crore.

Larsen & Toubro Share Price Target

Brokerages have maintained positive ratings on the stock despite near-term risks.

Macquarie has maintained an “Outperform” rating with a target price of Rs 4,910, which translates into 30 per cent upside from current levels.

It noted that 37 per cent of L&T’s order book at the end of Q3 FY26 was directly from the Middle East region, along with 33 per cent of order intake in the first nine months of FY26.

It added that 55 per cent of the Gulf order book is based on fixed-price contracts and flagged risks to margins due to evolving geopolitical developments. The brokerage said that while it is difficult to quantify the margin impact at this stage, a drop in margins is possible if tensions escalate.

CLSA has maintained an “Accumulate” rating with a target of Rs 4,842, which translates into 28 per cent upside from current levels.

It said the recent weakness linked to cyclical factors such as Middle East tensions could present a buying opportunity for a large energy infrastructure player.

According to its analysis, a potential blockade of the Strait of Hormuz for the whole of March could shave 1.8 per cent off consolidated earnings per share. It added that the stock is trading at attractive levels compared to other large-cap industrial peers.

Over the past five years, L&T shares have gained 160.29 per cent. In the last three years, the stock has risen 76.90 per cent, and over the past year, it is up 18.49 per cent. However, it has fallen 8 per cent so far this year and declined 12 per cent in the past week.