L&T share price gains over 1%, brokerages say ‘buy’ despite Middle East risks, see recovery if disruption eases

Larsen & Toubro

• L&T shares rise as brokerages keep bullish calls despite risks
• Middle East tensions pose near-term risks to L&T's order book
• Brokerages trim target prices but retain buy ratings on L&T

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Shares of Larsen & Toubro rose in early trade on Thursday, as brokerages maintained bullish calls, albeit with a caution about near-term risks from the company’s exposure to the Middle East. The analysts said L&T’s earnings could recover if regional disruptions ease.

The L&T stock was trading at Rs 3,931.3 in the opening minutes, up 1.25 percent from the previous close, after tumbling in the previous session. Geopolitical tensions in the Middle East have triggered sharp selling in stocks with significant exposure to the region.

Brokerages bullish on L&T's long-term growth

Brokerages largely retained a constructive stance on the stock despite trimming their target prices. They said that temporary disruptions in the Middle East could weigh on execution but are unlikely to derail the company’s long-term growth outlook.

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Jefferies maintained a ‘buy’ call on L&T stock but cut its target price to Rs 4,500 per share from Rs 4,715 earlier. The brokerage said about 37 percent of L&T’s order book is linked to West Asia, with Saudi Arabia contributing the largest share. According to Jefferies, a one-month disruption to work in the region could reduce FY26 earnings per share by about 6-8 percent. However, it added that normalisation in West Asia could support a recovery through continued order growth and margin stability.

Motilal Oswal also retained a ‘buy’ rating, while trimming its target price to Rs 4,400 from Rs 4,600. The brokerage estimates West Asia exposure at around 39-40 percent of L&T’s order book, highlighting near-term risks to project execution and margins if geopolitical tensions escalate. It also flagged potential pressure on valuations at L&T’s IT subsidiaries amid AI-driven disruption in the technology services sector and reduced the valuation multiple for the core business to 25 times from 27 times earlier.

Despite the near-term concerns, analysts remain constructive on the broader capital goods cycle.

CLSA said strong private capex momentum, large government contracts, and overseas order wins continue to support the sector’s growth thesis. The brokerage highlighted L&T among its top picks in the capital goods space, citing strong backlog visibility and improving margin outlook due to easing input costs.

The company continues to have a significant presence in international markets. For the nine months ended December 31, 2025, international orders stood at Rs 1.91 lakh crore, accounting for 55 percent of total order inflows. International revenues contributed 54 percent of total revenues.

The stock had closed at Rs 3,882 on Wednesday, down 4.54 percent, after falling more than 7 percent intraday during the session. Over the past five trading days, L&T shares have declined about 10 percent. The stock remains up nearly 20 percent over the past year, outperforming the Nifty 50’s roughly 9.6 percent gain during the same period.

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