Engineering and infrastructure giant Larsen & Toubro (L&T) saw its stock drop over 3 percent in early trade on the day after its Q4 FY26 results, as brokerages highlighted margin pressure and a relatively soft FY27 outlook, even while acknowledging the record‑high order book and the company’s Lakshya 2031 strategy. The slump extended the prior‑session decline, briefly dragging the share price to around ₹3,921, though the stock remains up 17.8 percent over the past year, significantly outperforming the Nifty 50, which is down 0.7 percent in the same period.
Q4 performance: revenue up, profit dips, margins shrink
L&T reported a 3 percent year‑on‑year decline in Q4 consolidated net profit to ₹5,326 crore, even as consolidated revenue rose 11 percent to ₹82,762 crore. The fall in reported profit was largely attributed to a one‑off exceptional gain of ₹475 crore in Q4 of the previous year, while recurring profit after tax (PAT) actually grew 5 percent to ₹5,289 crore.
EBITDA for the quarter climbed 5 percent to ₹8,610 crore, but EBITDA margin slipped to 10.4 percent from 11 percent a year earlier, reflecting cost pressure and softer execution, especially in the West Asia region linked to the ongoing US‑Iran‑Israel‑related disruptions.
Order book at record high, but questions remain on FY27
On the operating front, L&T posted order inflows of ₹89,772 crore in January–March 2026, pushing the overall order book to a record ₹7.4 lakh crore as of March 31, 2026, up 28 percent year‑on‑year. International orders now make up 52 percent of the total book, underscoring the company’s deepening exposure to global markets.
At the same time, the newly announced Lakshya 2031 strategy, which targets roughly 10–12 percent order‑inflow CAGR and 12–15 percent revenue CAGR, drew a mixed response from the Street. While some houses welcomed the scale and discipline of the plan, others questioned margins, execution, and the pace of returns from new investments.
Brokerage views divide between optimism and caution
- Nomura downgraded L&T to “Neutral” and cut its target price to ₹3,940, citing subdued operating performance in Q4 FY26 and a less‑positive view on FY27 order‑inflow momentum. The brokerage also described the Lakshya 2031 guidance as “underwhelming” and trimmed its FY27 and FY28 earnings estimates by about 8 percent.
- HSBC retained a “Hold” rating but lowered its target to ₹3,800, flagging the risk of the planned capital‑intensive projects weighing on return on equity, even as it acknowledged strong revenue and order inflows despite the West Asia conflict.
- Jefferies kept its “Buy” rating with a target of ₹4,885, noting that the company had already exceeded its Lakshya 2026 goals on both revenue and order‑inflow CAGR and seeing the FY27–FY31 plan as a logical extension. The brokerage linked the EBITDA miss largely to reduced engineering and construction revenues due to the Middle East‑area disruptions.
- CLSA, with an “Outperform” rating and a target of ₹4,842, praised the 22 percent jump in new orders and the 690‑basis‑point fall in working capital in Q4 FY26 but cautioned that the promised flat‑margin environment in FY27 is contingent on the reopening of the Strait of Hormuz from Q2 FY27 onward.
For investors, the message is that L&T remains structurally strong with a record‑order book and a clear long‑term road‑map, but short‑ to mid‑term performance will hinge on margin‑protection, execution resilience in conflict‑affected regions, and the pace at which new investments start generating acceptable returns
