Target: ₹4,047

CMP: ₹3,291.30

We revise our FY25/26E EPS estimates by -3.6/+5.2 per cent factoring in lower expected core margins in FY25 but increased execution in FY26. Larsen & Toubro (L&T) reported consolidated revenue growth of 15 per cent y-o-y, while EBITDA margin contracted by 93bps y-o-y due to higher SG&A costs. NWC to sales improved to 12 per cent (vs 16.1 per cent in FY23) owing to better collections, with FY25 guidance given at around 15 per cent.

Strong domestic pipeline is expected to drive order inflows post-elections, led by healthy government spending and an uptick in private capex across power T&D, renewable energy, transportation infra, water, buildings & factories, and civil infrastructure. GCC investment momentum should continue in hydrocarbon and infrastructure, but order inflow may moderate a little in FY25 (vs a robust FY24) given uncertainty around U.S. elections and geopolitical issues in West Asia.

L&T is betting on new areas such as electrolysers, data centers and semiconductors. Despite improvement, there is scope for further growth in Hyderabad Metro.

We roll forward to FY26 and maintain a ‘Buy’ rating with a revised TP of ₹4,047 (₹4,071 earlier), valuing the core business at a P/E of 26x FY26E (26x Dec-25E earlier).

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