Morgan Stanley has retained its ‘Overweight’ rating on Larsen & Toubro (L&T) with a target price of ₹4,100, implying an 18% upside from the current market price of ₹3,488. The brokerage highlighted that L&T delivered a strong set of numbers in Q1FY26, with core revenue rising 19% YoY—5% ahead of estimates—and core EBITDA up 19%, broadly in line.
Core EBITDA margin stood at 7.6%, flat year-on-year but slightly below the estimate of 8%. Segment-wise, hi-tech posted a 75% YoY growth, energy 47%, infra 7%, and others 1%. Domestic core revenues grew 6% YoY, led by infra, while international business was strong with a 37% YoY growth.
A key positive was the robust core order inflow of ₹76,600 crore, up 41% YoY, with international orders contributing 68% and domestic 22%. The total order book surged 25% YoY to ₹6.13 lakh crore, and the company reported a significant jump in its prospect pipeline to ₹14.8 lakh crore from ₹9.1 lakh crore in Q1FY25.
Consolidated adjusted PAT beat Morgan Stanley’s estimates by 9%, aided by higher-than-expected other income at ₹1,360 crore (versus the estimate of ₹930 crore).
Morgan Stanley believes L&T’s strong international traction, healthy project pipeline, and execution capabilities position it well for continued growth.
Disclaimer: The views and investment recommendations expressed in this article are those of the brokerage firm Morgan Stanley, as quoted. These do not represent the views of this publication. Investors are advised to consult their financial advisors before making any investment decisions.
