- UBS cut Larsen & Toubro's share price target due to risks from the Iran war
- Middle East accounts for 37% of L&T's order book and 35% of revenue by 2025
- L&T's domestic topline growth has been flat to modest amid a shift to Middle East projects
Multinational brokerage firm UBS has cut the share price target for Larsen and Toubro Ltd., citing risks to new orders, execution of current ones and revenue generation from the Gulf region, its fastest growing market, amid the Iran war.
The company has seen healthy order inflow of Rs 3.9 lakh crore and topline of Rs 2.2 lakh crore from the Middle East between fiscal 2023 and 2026 (year-to-date), with the region accounting for the lion's share of total order book (37%) and revenue (35%) as of December 2025, analysts said in a note.
On the other hand, L&T has recorded flat to modest domestic topline growth over the past two to three years as it shifted to winning and executing higher margin, faster moving energy-centric projects in the Middle East. Execution of some domestic segments continues to slow.
Analysts now expect core orders, revenue, and Ebitda to grow at CAGRs of 11%, 13%, and 16.6% over FY25–28, compared to our earlier estimates of 15.5%, 15.3%, and 20.2%. The reduction reflects some near- to medium‑term risks.
L&T Share Price Since Iran War Outbreak
What's Still In L&T's Favour
UBS said L&T's ability to mobilise a large workforce across domestic and Middle East sites, its strong balance sheet and focused local investments in select regions, combined with conservative participation by Korean, Japanese and European EPC global peers have enabled the Mumbai-headquartered conglomerate to capture a higher share of energy-focused contracts, translating to superior operating performance in the region.
"At this stage, we do not expect major manpower disruption for L&T in the ME with a 50,000 workforce at project sites. However, among the three critical pillars for large EPC execution (money, materials and manpower), the latter remains the most crucial with potential implications for both new orders and on-ground execution efficiency," the note said.
Unless the current disruption in the region extends materially, L&T's operational performance should not see much disruption.
UBS has maintained its 'Neutral' rating on the stock and lowered its 12-month target price to Rs 4,150 from Rs 4,500. The new target implies an upside of 7%.
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