Earnings "were a warning that investors/analysts need to curb their enthusiasm, the bank adds.
Deustche Bank also downgrades L&T, to "hold" from "buy", citing concerns about valuations and says large order wins are in the low-margin hydrocarbons sector.
L&T falls as much as 7.9 per cent, heads for biggest fall since July 2009.
Engineering conglomerate Larsen & Toubro doubled its net profit year-on-year for the quarter ended June 30 to Rs 967 crore, helped by new orders and gains from the sale of stakes it held in companies like L&T Finance Holdings and City Union Bank.
The company posted a consolidated turnover of Rs 18,975 crore for the June quarter, 10% higher than a year earlier.
L&Ts June quarter results surpassed Street expectations. A Bloomberg poll of L&Ts earnings estimates put out by analysts tracking the company had pegged its net profit to come in at Rs 800 crore and revenues at Rs 11,587 crore.