‘Buy’: Stock pick of the week by SBI Securities - Share price target; 5 reasons why

Brokerage firm SBI Securities, in its latest weekly pick, has named engineering and construction major Larsen & Toubro Ltd (L&T) as its ‘Pick of the week’. The brokerage has assigned a ‘Buy’ recommendation to the stock. 

SBI Securities has outlined five key rationales that make L&T a top pick:

Middle East operations: Despite ongoing conflicts in the Middle East, the brokerage noted that geopolitical tensions are"unlikely to have any meaningful impact on business. While the region accounts for more than a third of L&T's order book, 95% of these projects remain fully operational. 

“Any signs of easing of tensions is expected to improve execution pace, reduce logistics and input costs, and support margin recovery,” SBI Securities said.

Q3FY26 growth: The company shook off seasonal execution headwinds to post a robust performance in the third quarter of FY26, the brokerage said noting “driven by record-breaking order inflows of Rs 1.36 tn and a robust order book reaching Rs 7.33 tn.”

“Growth was primarily led by strong performance in the high-tech manufacturing, energy projects, and IT & technology services segments. The international revenues were significant, accounting for ~54% of the total group revenue,” SBI Securities added.

Order book inflow: SBI Securities noted that L&T total order inflows jumped approximately 17 per cent year-on-year during the quarter, pushing the overall order book to a massive Rs 7.33 lakh crore. 

Optimism on Kuwait order: “Management addressed concerns regarding cancellation of eight Kuwait projects worth over $8 billion, where L&T was L1,” said SBI Securities noting that orders were not part of the current order book, their cancellation does not impact the existing backlog. 

“Given their strategic importance for Kuwait’s production targets, they are likely to be retendered within the year, and L&T remains well positioned to compete,” the brokerage said,

Guidance and fair valuation: The brokerage noted that management expects to meet or exceed its previously set targets for FY26. “On order inflow, company now expects to exceed its 10% growth guidance for the full year, following a 30% growth surge in the first nine months of FY26,” it said.

On the valuation front, SBI Securities noted the stock trades at FY26E and FY27E P/E multiples of 30.1x and 24.7x, respectively. SBI Securities has set a target price of Rs 4,496 for the infrastructure giant.

“Prolonged geopolitical tensions; capex slowdown; execution risks arising from manpower shortages; volatility in order inflows,” the brokerage noted as key risks.