L&T Sharpens Focus on Diversification

Robust Order Pipeline Drives Revenue Growth

- 

Larsen and Toubro's (L&T) annual report of 2025 underscores its consistent efforts to diversify revenue streams, tap new growth opportunities, and enhance its return profile. We believe L&T is well-positioned to benefit from a robust international order pipeline, a low domestic ordering base from last year, an improved RoE trajectory, and disciplined capital allocation over the past few years. While near-term order inflows could face headwinds from the ongoing Israel-Iran conflict and volatility in oil prices, the long-term outlook remains strong, supported by a healthy order book that underpins steady revenue growth, stable working capital driving better return ratios, and continued margin improvement.

Factoring in the latest insights from the annual report and rolling forward our estimates to June 2027, we arrive at a revised TP of ₹4,100, based on 28x Jun'27E earnings for the core business and applying a 25% holding company discount to subsidiaries. We maintain our BUY rating.