Larsen & Toubro Ltd. delivered a strong set of fourth quarter results, marked by resilient order inflows, a substantial uptick in its financial year 2026 prospect base, and healthy margin performance—though brokerages diverged on their outlooks due to macro and execution-related risks.
While Investec and Bernstein remained upbeat, Goldman Sachs adopted a more conservative stance, highlighting execution and macro risks.
Goldman Sachs has maintained a 'neutral' rating, cutting its target price to Rs 3,260 from Rs 3,330. While acknowledging L&T's solid order inflows—up 29% year-on-year in the fourth quarter—and a 20% increase for the full year, Goldman Sachs flagged growing macro uncertainty and an increasing share of international projects as key concerns.
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The prospect base for financial year 2026 has jumped nearly 57% year-on-year to Rs 19 lakh crore, with guidance for 10% order inflow growth and 15% revenue growth. However, Goldman remained cautious, citing execution risks and international exposure, and models margins at 8.3%, below L&T's 8.5% guidance.
Investec offered a more optimistic view, reiterating its 'buy' rating and raising the target price to Rs 4,115 from Rs 4,030. The brokerage highlighted L&T's strong international momentum, with fourth quarter order inflows rising 24% year-on-year and revenues up 16% despite weaker domestic activity.
Investec also noted robust working capital management and a 500bps improvement in RoE to 16.3%. The Rs 19-lakh crore prospect pipeline is seen as a strong foundation for sustained growth, underpinned by sectoral diversity and global exposure. Management's guidance of 10% order inflow growth, 15% revenue growth, and 8.5% margins is also viewed as credible.
Bernstein also maintained its 'outperform' rating with a target price of Rs 3,922. It underlined L&T's exceptional performance in financial year 2025—marking the first time in a decade the company beat its guidance across revenue, order inflows, and margins.
While fourth quarter revenue came in 2% below consensus, likely due to early execution in prior quarters, Bernstein is confident in L&T's ability to deliver on its fiscal 2026 guidance. The firm's positive view is anchored in the Rs 19-lakh crore order prospect base versus Rs 12 lakh crore last year, offering visibility and a cushion against potential slowdowns.
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