L&T Shares In Focus As Motilal Oswal Trims Target Price — Check Rating, Potential Upside

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Motilal Oswal Report 

Motilal Oswal Financial Services has highlighted rising uncertainties for Larsen & Toubro Ltd. as geopolitical developments in the Middle East and emerging risks to its IT businesses reshape the risk‑reward equation for the conglomerate. According to the brokerage, L&T's investment case is shifting from a traditional “sum‑of‑the‑parts” approach to a more dynamic “moving parts” thesis, reflecting multiple evolving variables across business verticals.

While the brokerage is positive about the company's growth outlook based on its strong order book and prospects of healthy core PAT earnings over FY25-28E, it does believe that near-term headwinds persist on

1. international revenue, with the Middle East accounting for nearly 39-40% of its total order book as of 9MFY26; and
2. IT subsidiary's valuations, which are getting impacted by AI-led disruption.

Despite the uncertainties, Motilal Oswal remains constructive on L&T's medium‑term growth prospects, citing:

• A strong and diversified order book,
• Healthy project pipeline across domestic infrastructure and manufacturing, and
• Expectations of robust core PAT growth over FY25–28E. 

Valuation Revision and Rating

To reflect the current volatile macro environment, particularly in international geographies, Motilal Oswal has revised its core business valuation multiple to 25x (from 27x earlier). This leads to a new two‑year forward target price of Rs 4,400, compared to the earlier target price of Rs 4,600.

Despite the trimmed valuation, the brokerage retains its Buy rating, underscoring its long‑term confidence in L&T's fundamentals, execution capabilities, and multi‑year growth visibility.

Key risks and concerns

A slowdown in order inflows, geopolitical issues, delays in the completion of mega and ultra-mega projects, a sharp rise in commodity prices, an increase in working capital, and increased competition are a few downside risks to brokerage's estimates.

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