L&T Q2 Review: Bags Multiple Target Price Hikes On Strong Order Flow, Confident Management Guidance
This has been driven by the bullish outlook due to the robust order inflows and the expectation that a recent period of weak execution is set to pick up in the second half of the financial year.
Major brokerages including Jefferies, Investec, Citi, and Macquarie have maintained a positive stance with 'Buy' or 'Outperform' calls on Larsen & Toubro after the company posted its second quarter results.
The analysts have also raised their target prices. This has primarily been driven by the bullish outlook due to the robust order inflows and the expectation that a recent period of weak execution is set to pick up significantly in the second half of the financial year.
The target price hikes reflect increased confidence. Investec now sets the highest target price for the counter at Rs 4,800 raising it from Rs 4,460. This is followed by Jefferies at Rs 4,715, which is up from Rs 4,345. Citi has placed the price target at Rs 4,500, hiking it from Rs 4,350, and Macquarie at Rs 4,350 raising it from Rs 4,210.
Strong Order Book and Execution Outlook
Order flow remains a key positive, with L&T’s second quarter seeing strong new order wins, notably aided by overseas core orders, complemented by the return of the private sector in India.
Citi and Macquarie both highlight that while the profit and loss may have been mixed in second quarter, the execution ramp-up in second half is likely, aligning with seasonal trends. Jefferies believes that the weak execution seen in the past should now pick up.
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Confident Growth Guidance
L&T’s management has expressed confidence in surpassing the stated 10% year-on-year growth guidance for the financial year 2026 estimated.
Jefferies notes that this visible and conservatively guided growth provides a strong driver for the stock, suggesting L&T's outperformance relative to the Nifty index should persist.
Investec highlights the company’s exceptional balance sheet discipline and strong pipeline, particularly pointing to the Middle East markets as offering strong growth opportunities.
Macquarie notes the enhancing growth potential through strategic Memorandums of Understanding and tie-ups in the Defence and Semiconductor businesses.
Further, Citi points to two crucial long-term catalysts which are the announcement of the next five-year strategy plan post the fourth quarter of financial year 2026. And the likely resolution of the Hyderabad Metro issue by the end of 2026. Both of which are expected to maintain positive sentiment. Jefferies also hints that new initiatives could provide scope for positive surprises.
