L&T shares fall 3% after a downgrade from Nomura, HSBC target cut after Q4 results

Brokerage firm Nomura has downgraded its rating on Larsen & Toubro in its latest note on Wednesday, May 6, after the company reported results for the March quarter and also shared its guidance for financial year 2027. The stock has declined 3% in early trading on Wednesday.

Nomura has downgraded L&T to "neutral" from its earlier rating of "buy" and also trimmed its price target to ₹3,940 from ₹4,510 earlier. The revised price target implies a downside potential of 3.3% from current levels.

The brokerage has cut its financial year 2027 and 2028 core earnings per share (EPS) estimates by 8% to factor in:

• Lower-than-expected financial year 2027 sales / EBITDA margin guidance of 10% to 12%, which is flat from last year.


• Execution disruptions due to the West Asia crisis


• and Cost headwinds, particularly in the case of international operations

Nomura also added that L&T is trading at 32 times and 26 times its estimated financial year 2027 and 2028 core earnings, implying lesser comfort on valuations due to near-term uncertainties and limited visibility on improving Return on Equity (RoE).

Along with Nomura, HSBC has also cut its price target on Nomura to ₹3,800 along with its "hold" rating, stating that large growth in order inflow on a high base is tough in the current geopolitical environment and that new investments made can be a drag on its RoE.

CLSA has an "outperform" rating on L&T with a price target of ₹4,842. It stated that L&T's $82 billion order backlog, which grew 28% from last year, appears "solid" in the current environment.

Other than that, the fall in working capital by 690 basis points was another positive from L&T's results, as per CLSA, who went on to add that the 10% to 12% rise in new orders and execution with flat margins is contingent on the Strait of Hormuz reopening from the second quarter of financial year 2027.

34 analysts have coverage on L&T, of which 27 have a "buy" rating, six have a "hold" rating and one has a "sell" recommendation.

Shares of L&T are trading 3.1% lower on Wednesday at ₹3,929.9. The stock had gained 10% in the last one month.