L&T's order inflow continues to beat consensus expectations. It secured Rs 1 trillion (+54% YoY) worth of orders in its core businesses in Q2 and Rs 1.7 trillion (+48% YoY) in H1 FY26.
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ICICI Securities Report
Larsen and Toubro Ltd.'s current order book, at Rs 6.7 trillion (2.5x trailing twelve months ex-services sales), provides strong execution visibility. Moreover, order potential pipeline remains strong at Rs 10.4 trillion for the remainder of FY26 (vs Rs 8.1 trillion YoY). We value the company on an SoTP basis.
Given the business moat in terms of execution capabilities, we assign a target multiple of 30 times FY28E P/E to standalone business. We arrive at an SoTP-based revised target price of Rs 5,000/share, where the core business is valued at Rs 3,394/share.
The balance is other listed subsidiaries. We have valued its listed subsidiaries as per their market capitalisation and adjusted the same for the shares held by L&T in the aforementioned subsidiaries.
We maintain Buy with a revised target price of Rs 5,000/share (roll over to FY28E).
We value the stock at 30x FY28E core PAT of ~Rs 153 billion.
Key risks:
Slowdown in hydrocarbon capital expenditure due to any fluctuation in crude oil prices; and
higher-than-expected materialisation of manpower availability crisis.
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