L&T Q4 Results Review: Robust Pipeline, But Macro Concerns Temper Optimism

Larsen & Toubro Ltd. delivered a strong set of fourth quarter results, marked by resilient order inflows, a substantial uptick in its financial year 2026 prospect base, and healthy margin performance—though brokerages diverged on their outlooks due to macro and execution-related risks.

While Investec and Bernstein remained upbeat, Goldman Sachs adopted a more conservative stance, highlighting execution and macro risks.

Goldman Sachs has maintained a 'neutral' rating, cutting its target price to Rs 3,260 from Rs 3,330. While acknowledging L&T’s solid order inflows—up 29% year-on-year in the fourth quarter—and a 20% increase for the full year, Goldman Sachs flagged growing macro uncertainty and an increasing share of international projects as key concerns.

The prospect base for financial year 2026 has jumped nearly 57% year-on-year to Rs 19 lakh crore, with guidance for 10% order inflow growth and 15% revenue growth. However, Goldman remained cautious, citing execution risks and international exposure, and models margins at 8.3%, below L&T's 8.5% guidance.

Investec offered a more optimistic view, reiterating its 'buy' rating and raising the target price to Rs 4,115 from Rs 4,030. The brokerage highlighted L&T’s strong international momentum, with fourth quarter order inflows rising 24% year-on-year and revenues up 16% despite weaker domestic activity.

Investec also noted robust working capital management and a 500bps improvement in RoE to 16.3%. The Rs 19-lakh crore prospect pipeline is seen as a strong foundation for sustained growth, underpinned by sectoral diversity and global exposure. Management's guidance of 10% order inflow growth, 15% revenue growth, and 8.5% margins is also viewed as credible.

Bernstein also maintained its 'outperform' rating with a target price of Rs 3,922. It underlined L&T’s exceptional performance in financial year 2025—marking the first time in a decade the company beat its guidance across revenue, order inflows, and margins.

While fourth quarter revenue came in 2% below consensus, likely due to early execution in prior quarters, Bernstein is confident in L&T’s ability to deliver on its fiscal 2026 guidance. The firm's positive view is anchored in the Rs 19-lakh crore order prospect base versus Rs 12 lakh crore last year, offering visibility and a cushion against potential slowdowns.