Larsen & Toubro Analysts Remain Bullish on Strong Order Book Despite Q2 Execution Lags

Engineering giant Larsen & Toubro (L&T) is attracting positive analyst attention driven by its substantial order book, which stands at 3.6 times its FY25 sales at ₹6.67 trillion, and a project pipeline of ₹10.4 trillion for H2FY26, marking a 29% year-on-year increase. Nuvama Institutional Equities and Motilal Oswal Financial Services (MOFSL) have both retained their 'Buy' ratings. Nuvama raised its target price for L&T to ₹4,680, indicating an 18.43% potential upside. The firm also revised its FY27E/28E Earnings Per Share (EPS) estimates upwards. L&T's Q2FY26 results showed a 15.6% year-on-year increase in net profit to ₹3,926 crore and a 10.4% rise in revenue to ₹67,984 crore. However, revenue missed street estimates by 4%, attributed to monsoon-related execution delays during the first half of the fiscal year. Ebitda grew 7% to ₹6,806 crore, with the Ebitda margin at 10%. The consolidated order book grew 30.7% year-on-year to ₹6.67 trillion by September 2025, with international orders comprising 49% of the total. Analysts anticipate core operating margins, which they believe have bottomed out around 8.2%, to stabilize in the 8.3–8.5% range, supporting an expected 15% sales growth through FY27/28E. Management reiterated its FY26 guidance, expecting H2FY26 to be execution-heavy following a weaker H1, bolstered by Middle East L1 orders worth $4.5 billion. MOFSL also reiterated its Buy rating with a revised target of ₹4,500, expecting core E&C revenue/Ebitda/PAT to grow at a Compound Annual Growth Rate (CAGR) of 16%/18%/22%. MOFSL cautioned about potential risks including slower order inflows, project completion delays, commodity price surges, increased working capital needs, and heightened competition.

Impact This news is highly relevant for Indian stock market investors, signaling strong confidence in a major infrastructure and engineering company. Positive analyst outlook and revised price targets can positively influence L&T's stock performance and potentially boost investor sentiment towards the broader infrastructure sector. Rating: 8/10

Difficult terms: Order Book: The total value of contracts that a company has secured but has not yet completed. Project Pipeline: A list of potential future projects that a company is actively pursuing or expects to undertake. Consolidated Order Book: The total value of orders for both the parent company and its subsidiaries combined. L1: Stands for 'Lowest/Best/First' bid; it indicates the company that has submitted the most competitive bid for a project. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance, excluding financing and accounting decisions. EBITDA Margin: Calculated by dividing EBITDA by revenue, it represents the profitability of a company's core operations as a percentage of its sales. EPS (Earnings Per Share): The portion of a company's profit allocated to each outstanding share of common stock. CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period of time, assuming that profits were reinvested. Holding Company Discount: A valuation concept where the market value of a holding company's stock is less than the sum of the market values of its individual subsidiaries.