L&T shares rise in response to Q1 results; Two analysts see stock crossing ₹5,000 levels

Shares of Larsen and Toubro Ltd. (L&T) gained on Wednesday, July 28, after over 80% analysts tracking it continued to recommend investors to "buy" the infrastructure conglomerate after its June quarter results.

Brokerages Jefferies and Goldman Sachs have "buy" ratings on L&T while CLSA has an "outperform" rating. In fact, two out of the 33 analysts who cover it, including Jefferies, see the stock testing or crossing levels of ₹5,000 over the next 12 months.

Jefferies

The brokerage has maintained its "buy" rating and a price target of ₹5,000 per share for L&T.

It said the company's first quarter earnings before interest, taxes, depreciation and amortization (EBITDA) was 8% lower than expectations and engineering and construction (E&C) execution was weak.

It said the first 14% rise in order flow is tracking L&T's annual 10-12% growth guidance from the previous year.

L&T management has maintained its 10-12% revenue guidance, implying that the second half of the ongoing fiscal will be better, but is likely conditional on the Iran war settling down, Jefferies said.

The brokerage believes the L&T stock should see a leg up to ₹4,278 (when the conflict started) if global tensions ease, with earnings visibility adding to its upside thereon.

CLSA

The brokerage has an "outperform" rating on L&T with a target of ₹4,842 apiece.

It said the company's first quarter earnings beat three of four guidance items -- new orders, recurring E&C margins and working capital, while execution missed.

The biggest surprise was its E&C margin, which was up 30 basis points, excluding one-off non-cash expected credit loss (ECL) provisions of 50 basis points and new orders, which increased 14% from last year, led by billions of dollars in orders from an EU offshore win and India private and industrial capex, as the West Asia region went dry.

L&T's $82 billion backlog grew 27% from the previous year and appears solid in the current environment, according to the brokerage.

For the financial year 2027, L&T retained its guidance of a 10-12% rise in new orders and execution with flat margins, despite the Strait of Hormuz opening delay, CLSA said.

L&T has started the execution of its exciting FY31 plan, touching all the right chords of wealth creation, from building an AI business to expanding into electronic manufacturing, green tech and chemistry, CLSA added.

Goldman Sachs

The brokerage has a "buy" rating and a target of ₹4,370 per share on L&T.

It said L&T's plant and machinery (P&M) (core) order inflow was 17% in the first quarter compared to the brokerage's estimate of it declining 6%. Its first quarter core EBITDA margins came in at 6.9% compared to estimates of 7.1%, a 20 basis point decline from the previous year, driven by lower execution in core segments, it said.

The brokerage mentioned key highlights in the quarter:

Prospect base being resilient at ₹15 lakh crore, despite strong order inflow in the first quarter and well spread across domestic and international with private sector representing 45% in the mix.

Project execution continued to be impacted amid West Asia conflict, reflected in weaker execution.

27 out of the 33 analysts tracking the stock have a "buy" rating, five others have a "hold" rating, while one solitary analyst has a "sell" rating on the stock.

Shares of Larsen and Toubro have opened 1.6% higher on Wednesday at ₹3,895.4. The stock is still down 6% so far this year.

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