L&T Q4 Results Review: Motilal Oswal Maintains 'Buy' On Healthy Outlook, But Cuts Target Price — Here's Why

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Motilal Oswal Report

Larsen & Toubro Ltd. ended FY25 on a strong note, with its Q4 FY25 and full-year performance exceeding our estimates. The company reported strong 20%/19% YoY growth in inflows/revenue in the core engineering and construction segment, largely driven by a strong uptick in inflows and execution from international geographies.

Despite strong inflows during FY25, L&T has guided for 10% YoY inflow growth as its prospect pipeline jumped 57% YoY to Rs 19 trillion. This was driven by international prospect pipeline improvement despite domestic prospect pipeline being flat YoY. L&T is optimistic about spending in the GCC region for renewable, clean energy and transmission projects and has strong funding lines for existing projects, despite oil prices hovering around $60 per barrel.

We expect L&T’s execution to remain strong with a strong order book. We remain positive on L&T considering its ability to benefit from a large prospect pipeline and maintain healthy net working capital and RoE. We thus raise our inflow and execution estimates for core E&C.

However, with a reduction in estimates and valuation for IT subsidiaries, our target price is revised to Rs 3,950 (from Rs 4,100) based on 28x Mar’27E earnings for core business and a 25% holding company discount to subsidiaries. Maintain Buy

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