L&T shares gain 4% as robust order intake offsets margin squeeze
Larsen & Toubro's stock surged after first-quarter profit rose 14%, with investors focusing on a record international order pipeline that analysts expect to drive future earnings despite a near-term decline in profitability.
Shares in Larsen & Toubro climbed nearly 4% to an intraday high of ₹3,978 on Wednesday after the Indian engineering conglomerate reported its June quarter results. Consolidated profit after tax rose 14% year-on-year to ₹4,123 crore, while revenues increased 7% to ₹67,942 crore.
Underlying profitability faced pressure, with EBITDA falling 3% to ₹6,116 crore and margins contracting from 9.9% to 9%. However, the group significantly bolstered its future workload, securing new orders worth ₹1,08,014 crore during the quarter.
International business now anchors the company's outlook. Overseas revenues accounted for 51% of the quarterly total at ₹34,393 crore, while international orders made up 52% of the consolidated order book. This overall order book reached ₹778,954 crore by the end of June, up 5% from March.
Brokerages maintained bullish stances, arguing the margin dip is secondary given the scale of upcoming work. Motilal Oswal Financial Services kept a 'buy' rating and a target price of ₹4,550. "We see positives in healthy 14% YoY growth in core E&C (engineering and construction) order inflows, core E&C revenue growth of 3% YoY, and flat margins at 7.6%. NWC (net working capital) at 4.9% of sales and RoE (return on equity) at 16.1% remained strong despite a challenging environment across domestic and international markets," the firm said.
The forward pipeline remains a key asset for the stock. Motilal Oswal noted a strong prospect pipeline of ₹15 lakh crore for the remaining nine months of the fiscal year, with Middle East activity expected to accelerate. JM Financial also kept a 'buy' call, trimming its target to ₹4,640 from ₹4,700.
JM Financial expects the company to deliver over 16% compound annual growth in EBITDA through fiscal 2028. "Management expects a pick up in Middle East awarding from Q2FY27 onwards and noted that none of the projects has been cancelled. Thus, we view L&T’s order inflow guidance of 10-12% for FY27 as achievable," the brokerage said.
Alongside the earnings, L&T announced the merger of its wholly-owned subsidiary, L&T Power Development Limited, into the parent company. Technical analysts also pointed to strengthening momentum, noting the stock has found firm support near the ₹3,800-3,850 level.
Jigar S. Patel of Anand Rathi Share and Stock Brokers highlighted that the stock has reclaimed its 50-day EMA. "As long as the stock sustains above ₹3,850, the overall trend is expected to remain positive. On the upside, immediate resistance is placed at ₹4,050, followed by a stronger hurdle near ₹4,200–4,250. A decisive breakout above ₹4,250 could trigger fresh buying momentum and pave the way towards ₹4,400 in the coming weeks," Patel said.
Vipin Kumar of Globe Capital Market pointed to strong price support around the ₹3,700–3,720 zone. "Going forward, we expect the stock to test its recent swing highs near ₹4,270. A decisive close above the ₹4,300 – ₹4,350 resistance zone could trigger a fresh rally into uncharted territory," Kumar said.
