L&T shares: JM Financial cuts share price target but retains ‘Buy’; still sees double-digit upside

Larsen & Toubro Ltd (L&T) exposure to the Middle East may be a short-term bumps in the road, prompting JM Financial to trim its target price for the infrastructure heavyweight. However, the brokerage firm remains overall positive on the company's long-term prospects, keeping its 'Buy' call firmly intact.

The brokerage attributed this valuation trim to "cuts to FY27E/28E core EBITDA by 10.8%/9.2% on account of the fallout of the West Asia crisis and declines in subsidiaries' share prices".

The brokerage noted that the ongoing geopolitical conflict involving Israel, the USA, and Iran poses near-term headwind for the engineering giant. With 37% of L&T's massive Rs 7.33 lakh crore order book stemming directly from the Middle East, it said.

“Management has stated 95% of work sites are operational and in the following months (if conflict continues), raw material logistics and cost inflation may emerge as key headwinds,” JM Financial said.

JM Financial is particularly wary of cost inflation creeping into fixed-price contracts, especially for raw materials like diesel, aluminium, and polymers.

“That said, longterm outlook for the Middle East business remains robust with no news of project cancellations or payment delays,” JM Financial added.

Domestically, L&T has delivered strongly on its FY26 targets on core revenue, order inflows and working capital/RoE under its Project Lakshya initiative, the brokerage said.

L&T share price target

Trading at a current market price of around Rs 3,711, the stock still holds nearly 25% upside potential based on JM Financial's revised 12-month target price of Rs 4,380, down from its earlier target of Rs 4,655.