Larsen & Toubro Ltd.

Short-Term BUY Recommendation
Target: ₹3,900–3,950 | Time Horizon: 4 weeks | Stop-loss: ₹3,530
CMP: ~₹3,620–3,650

Investment Thesis

Larsen & Toubro (L&T), India’s largest engineering & construction conglomerate, remains strongly positioned to outperform over the near term, driven by robust order inflows, execution momentum, improving margins, and favorable macro tailwinds.

The stock presents an attractive buying opportunity at current levels, with a potential ~10% upside over the next four weeks, supported by strong earnings visibility and positive technical structure.

Key Catalysts

1️⃣ Robust Earnings & Order Book Momentum

L&T recently reported a standout quarter, achieving over 25% YoY growth in net profit alongside a double-digit increase in revenues. More importantly, the company has secured record-high new order inflows, with international orders contributing significantly to the pipeline—now comprising approximately 70% of the latest order book.

This diversified and well-backed order book is expected to drive strong revenue conversion over the coming quarters, providing earnings visibility that supports the stock’s rerating.

2️⃣ Positive Analyst Sentiment & Upgraded Targets

The Street maintains an overwhelmingly bullish stance on the stock, with several analysts revising short-to-medium-term price targets upwards on the back of L&T’s performance and outlook.

Consensus 12-month targets imply further upside beyond the next 4 weeks, but even in the short term, actionable targets in the ₹3,900–₹3,950 range are achievable based on current momentum and technical patterns.

3️⃣ Favorable Margin & Profitability Outlook

Management commentary indicates improving core engineering margins, supported by better pricing discipline and stable commodity prices. This positions L&T to deliver operating leverage-led margin expansion over FY26, which should translate into higher EPS growth and valuation support.

Projected earnings growth of ~17% CAGR and revenue growth of ~13% CAGR over the next 2–3 years provide a solid foundation for sustained share price appreciation.

4️⃣ Technical Setup Supports Short-Term Trade

From a technical perspective, the stock has been forming higher highs and higher lows on the daily charts, with moderate volatility (~1.7%) and well-defined support levels.

The ₹3,530–₹3,550 range offers a strong technical floor, while breakout potential above ₹3,880 can trigger further bullish moves toward ₹3,950. Momentum indicators remain supportive of a continued uptrend in the coming weeks.

Risks to Monitor

  • Execution challenges in large-scale international contracts remain a watch point, especially in fixed-price agreements.
  • Global macroeconomic weakness, particularly in export markets, could moderate order inflows or delay project execution.
  • Currency volatility and commodity price swings could impact margin performance in the near term.

That said, the company’s diversified order book and balanced geographic mix provide a cushion against isolated headwinds.

Recommendation Summary

BUY L&T stock within the ₹3,550–₹3,600 range.
Target: ₹3,900–₹3,950 over the next 4 weeks.
Stop-loss: ₹3,530.

Strong fundamentals, earnings momentum, improving profitability, and positive market sentiment make this an attractive near-term trade. The stock remains a core structural long-term holding as well.