L&T's near-term ordering may be affected by the Israel-Iran conflict in the Middle East and fluctuating oil prices, but the long-term support comes from a strong order book sustaining healthy revenue growth, fairly stable working capital driving improvement in return ratios, and margin improvement.
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Motilal Oswal Report
At the current price, Larsen and Toubro Ltd. is trading at 30x/25x P/E for FY26/27E for core EPC business. We incorporate annual report details and roll forward our valuations to Jun'27 to arrive at a revised target price of Rs 4,100, based on 28 times Jun'27E earnings for core business and a 25% holding company discount to subsidiaries.
We remain positive on the company considering its ability to benefit from a large prospect pipeline and maintain healthy net working capital and RoE. Maintain Buy.
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 our estimates.
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