Buy Larsen and Toubro; target of Rs 4144: Prabhudas Lilladher

Prabhudas Lilladher's research report on Larsen and Toubro

Larsen & Toubro (L&T) reported consol. revenue growth of 15.5% YoY, while EBITDA margin declined by 27bps YoY to 9.9%. Strong prospects in domestic as well as international markets across key segments such as Hydrocarbon, Transmission & Distribution, Renewable Energy & Heavy Civil continue to drive L&T’s growth prospects. The recently awarded Ultra-Mega order for its Hydrocarbon Offshore business further reinforces the company’s growing presence in the Middle East. During the quarter, L&T also acquired the semiconductor power module business from Japan’s Fujitsu General and secured a contract with IOCL to establish India’s first and largest Green Hydrogen manufacturing plant. These strategic initiatives highlight the company’s focus on capitalizing on emerging sectors expected to drive longterm growth. The management’s reiteration of FY26 guidance of ~10% order intake growth, ~15% revenue growth, and P&M margins of ~8.5% reflects confidence in the company’s robust execution capabilities and resilient business model.

Outlook

The stock is currently trading at a P/E of 25.9x/20.7x on FY26/27E earnings. We maintain our ‘Buy’ rating and value the core business at a PE of 25x Mar’27E (same as earlier) arriving at a SoTP-derived TP of Rs4,144 (Rs4,037 earlier).