Motilal Oswal has maintained a 'Buy' rating on Larsen & Toubro (L&T), setting a target price of Rs 4,400 per share. The brokerage highlighted strong order inflows and a massive project pipeline as key growth drivers. Investors should keep track of the company's ability to manage execution risks, particularly regarding ongoing geopolitical tensions in the Middle East.
Brokerage firm Motilal Oswal has reiterated its positive stance on engineering major Larsen & Toubro (L&T), maintaining a 'Buy' rating with a target price of Rs 4,400 per share. This target suggests a potential upside of approximately 19% from the stock's recent market price of Rs 3,702. The firm’s outlook is based on L&T's consistent ability to secure large-scale domestic and international orders.
Strong Order Inflows to Drive Growth
L&T’s growth is currently supported by a significant order book, which stood at Rs 7.8 trillion as of June 2026. The company is also looking at a vast prospect pipeline worth Rs 15 trillion for the first nine months of fiscal year 2027. These orders span various sectors, including hydrocarbon, offshore, and battery energy storage systems, with a notable footprint in the Middle East. Additionally, the company is expanding its reach into new technology areas, evidenced by a recent partnership with NVIDIA to construct an ultra-mega AI factory in India.
Financial Outlook and Execution Challenges
Motilal Oswal projects that L&T's core engineering and construction business will sustain a steady growth rate through fiscal year 2029. Analysts expect order inflows to grow at a compound annual rate of 10% and revenue to rise by 14% over this period. While the financial outlook appears stable, the brokerage has pointed to specific risks that could affect performance.
One of the primary concerns is the ongoing instability in West Asia, which creates execution risks for the company’s international projects. Any delay or cost increase in these large projects can impact profit margins and affect how efficiently the company manages its working capital. Furthermore, inflationary pressure on commodity costs and rising competition in the infrastructure sector remain factors that investors should watch closely. The company's ability to maintain its profit margins while navigating these challenges will be a critical monitorable for shareholders in the coming quarters.