- Goldman Sachs has cut Larsen & Toubro's 12-month price target to Rs 4,420 citing execution risks
- L&T stock has fallen 18% since Iran war due to Middle East project and capex concerns
- L&T's Rs 7.3 lakh crore order backlog includes 37% from the Middle East, mainly Saudi Arabia
Multinational brokerage firm Goldman Sachs has reduced the share price target for Larsen & Toubro Ltd., flagging near‑term execution risk as valid due to geopolitical tensions. While maintaining a 'buy' rating, the 12-month price target has been revised to Rs 4,420 from Rs 4,950 earlier. The new target indicates a potential upside of 28% over the previous close.
L&T's stock has declined 18% since the outbreak of the Iran war, versus a 7% drop in the benchmark BSE Sensex, driven largely by concerns around project execution in the Middle East and expectations of reduced regional capex that could affect its FY27 and FY28 revenue pipeline.
While some near‑term execution risk is valid due to geopolitical tensions, the medium‑term prospect base is unlikely to change meaningfully, though certain project deferrals over the next few quarters remain likely, analysts said in a note.
As of December 2025, L&T had a robust order backlog of Rs 7.3 lakh crore, of which nearly half is international and 37% is tied to the Middle East, with a major concentration in Saudi Arabia.
Although no major direct disruption has been reported at project sites, L&T faces indirect risks relating to supply chains, logistics delays, and rising shipping costs. A further challenge is its high share of fixed‑price contracts (42–43%), which limits the company's ability to pass on cost escalations driven by inflation or input shortages, Goldman Sachs said.
Any rise in commodity prices, particularly steel, could also pressure margins.
Strong Order Visibility
Despite these near‑term risks, L&T's medium‑term revenue outlook remains supported by a healthy book‑to‑bill ratio of 3.2x. While project awards in the Middle East may slow in the coming months, countries such as Saudi Arabia are expected to maintain strong oil and gas capex, analysts said.
L&T remains fundamentally well‑positioned, supported by strong order visibility, expansion into high‑growth sectors, and expectations of double‑digit revenue and profit growth over the next five years, they added.
ALSO READ: L&T Target Price Cut: Middle East Woes May Weigh On Order Wins, Revenue, Says UBS
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