The Larsen & Toubro share price has surged 6% in 6 months. The company has been in focus after its strategic partnership with BEL and is confident about execution growth remaining strong for the next few years. Leading domestic brokerage house, Motilal Oswal has reiterated Buy with a target price of Rs 4,300 per share. This implies 17% upside for L&T share price over the next 12 months.
Motilal Oswal on L&T: Big defence push
Motilal Oswal is betting big on L&T’s defence vertical. Housed in the hi-tech manufacturing segment and with a prospect pipeline of Rs 21,500 crore, they see it as a key driver.
The company focuses on Naval systems, weapon systems, engineering and ground systems and sensors and communications. L&T is eyeing projects across platforms and is collaborating with technology startups to strengthen its portfolio.
Motilal Oswal pointed out that L&T’s defence order inflows stood at Rs 12,100 crore in FY23, it had increased to Rs 13,300 by FY25 and the annuallised revenue growth stood at 36%. “This segment, though still small, is expected to grow much faster than the core E&C division,” they added.
Motilal Oswal on L&T: International order inflow
The other encouraging factor, as per Motilal Oswal, is the international order pipeline for L&T. The company’s “international order inflows have more than compensated for the flat trend in domestic inflows. With an overall prospect pipeline of Rs 15 trillion for the remaining fiscal,” they added.
The company is eyeing projects across thermal, nuclear, hydroelectric, renewable, urban infra, buildings and factories, state irrigation projects and defence in the domestic segment and gas, renewable and maintenance capex of existing oil fields in the international segment. Motilal Oswal highlighted that the “recent order inflows of Rs 23,000 crore from Adani, a significant order in nuclear from NPCIL, and other large orders in power T&D, heavy civil, high speed rail, renewable, and metals and minerals indicate momentum in these segments in domestic markets.”
International inflows so far in H1FY26 have come from hydrocarbon, gas and power T&D segments.
Motilal Oswal on L&T: Valuation
With a potential Rs 15 trillion pipeline, L&T at current price, “is trading at 29x FY26 PE and 24x FY27 PE, according to Motilal Oswal estimates. The brokerage house is maintaining“estimates for core E&C and continues to value the company at 28x P/E two-year forward earnings for core business and a 25% holding company discount for subsidiaries.”
That said, Motilal Oswal outlined that a slowdown in order inflows, geopolitical issues, delays in the completion of mega and ultra-mega projects, a sharp rise in commodity prices, an increase in working capital, and increased competition are a few downside risks that the company should watch out for.