L&T’s share price is rallying and is among the top gainers in trade today. The street is responding positively to the strong guidance by the management. The L&T management expects order inflow growth to exceed 10%, revenue growth of 15% and EBITDA margin of 8.5% for FY26.
However, the most important catalyst is the company’s Hyderabad Metro stake divestment. The company confirmed in-princple understanding with Telangana govt to divest its stake in Hyderabad Metro. The company now plans to conclude this transaction by Q4FY26. Under the arrangement, the entire debt of Rs 13,000 crore of Hyderabad Metro would be taken over by SPV floated by Telangana govt. Divestment of this stake would reduce the debt and interest burden from the consolidated financials
Motilal Oswal on L&T
Motilal Oswal has Buy on L&T with a target price of Rs 4,500 per share. This implies 14% upside for the L&T share price from current levels.
According to the brokerage house, L&T’s in-principle understanding with the Government of Telangana to divest its stake in Hyderabad Metro is a big positive. “Revival in domestic order inflows and non-core asset divestment should lead to valuation re-rating for the stock,” they added.
At the current price, for core E&C, “L&T is trading at “30x/25x/P/E on FY26/ FY27 earnings. We tweak our estimates to factor in H1 performance for the core business,” Motilal Oswal added.
According to them, any slowdown in order inflows, delays in the completion of mega and ultra-mega projects, and a sharp rise in commodity prices remain key risks, though. Any increase in working capital and increased competition are concerns going forward.
Nuvama on L&T
Nuvama too has a Buy rating on L&T with a target price of Rs 4,680 per share. The brokerage house reiterated that the core OPMs improved 20 bps YoY to 7.8% led by mega Hydrocarbon wins. The management reaffirmed FY26 guidance of 15% revenue growth and 8.5% core OPMs, noting that the order book growth will surpass the 10% target.
According to Nuvama, “core OPMs have bottomed out at 8.2% and are likely to remain around 8.3–8.5%”. They expect 15% sales growth through FY27-FY28 – as more projects hit margin milestones.
According to them, H2FY26 is likely to be execution-heavy after a weak H1 (hit by heavy monsoons). “With conversion of Middle East L1 orders and a normal H2 inflow run-rate, we expect FY26 OI to register 12–15% growth,” Nuvama added.
