Sharekhan's research report on Larsen and Toubro
The company expects credit costs to normalise in H2FY26 as stress in MFI segment seems to be bottoming out. Implementation of MFIN Guardrails 2.0 would have a limited impact as the company has a relatively low proportion of overleveraged customers, while the effect of the ordinance is manageable in Karnataka and Tamil Nadu. The company has guided for a 20% near-term loan growth, which may inch up to ~25% gradually. It remains committed to its target profitability metrics — while NIMs would come off, opex improvements and lower credit costs will help to offset impact.ml.
Outlook
We reiterate a Buy rating with a revised PT of Rs. 240. The stock trades at 1.7x/1.5x its FY2026E/FY2027E ABV estimates.
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