L&T: Orders Keep Pouring In Despite the Middle East Crisis, Motilal Oswal Sets ₹4,400 Target
₹7.8 lakh crore order book, and ₹1.3 lakh crore of fresh orders announced so far in 2QFY27
The West Asia crisis has not been easy on infrastructure companies. Even so, new orders at Larsen & Toubro (L&T), the country's largest engineering company, have risen sharply. In its company report dated October 7, 2026, brokerage Motilal Oswal has reiterated a 'BUY' rating on the stock. Here is the full picture, based on the report.
Rating and Target Price
At the time of the report, the stock was trading at ₹3,702. The brokerage has set a target price of ₹4,400, implying a potential upside of about 19%. The target is based on a sum-of-the-parts (SoTP) method. The core construction business is valued at 25 times December 2028 earnings, which works out to ₹3,394 per share. A 25% holding company discount has been applied to the subsidiaries (L&T Finance Holdings ₹454, LTI-Mindtree ₹702, L&T Technology Services ₹187). On this basis, the total value comes to about ₹4,401.
A Sharp Rise in Order Inflows
Order inflows stood at ₹873 billion as of 1QFY27. Orders announced so far in 2QFY27 total about ₹1.3 lakh crore, and total orders announced so far in FY27 are put at about ₹2.1 lakh crore. These include big names such as JSW Steel (₹100-150 billion), NTPC (₹100-150 billion), ADNOC Offshore (above ₹150 billion) and Tennet (above ₹150 billion). The brokerage has assumed order inflows of ₹3.8 lakh crore for FY27 and ₹4.3 lakh crore for FY28.
Middle East: Big Orders Despite the Crisis
Despite the West Asia crisis, the company has won orders worth more than ₹775 billion from the region. These span hydrocarbon, offshore projects, infrastructure, gas compression plants and battery energy storage systems (BESS). According to the report, L&T is the largest contractor in Saudi Arabia, with about $25.9 billion of projects under execution as of June 30, 2026. Contract awards from Saudi Arabia have declined over the past two years but are now gradually improving.
The company is also taking orders from Europe, Africa and Canada, and is now eyeing North Asia (South Korea, Japan, Taiwan). In 1QFY27, the international share of total inflows was 54%.
Domestic Front: Thermal Power, Data Centers and NVIDIA
Domestically, wins include thermal power projects from NTPC and DVC, platform and pipeline projects from ONGC, and a mega order from NVIDIA for its B300 AI factory. The company's thermal power portfolio has now grown to five projects: NTPC (₹250 billion), Adani Power (₹230 billion), Torrent Power (₹180 billion), NTPC Lara (₹100-150 billion) and DVC (₹50-100 billion).
The company also expects orders from semiconductor plants, data centers and real estate. Citing industry reports, the report says L&T could win the contract for the first batch of 59 Zorawar tanks in defense. In nuclear power, the government aims to raise capacity from 8.9GW to 22.5GW by FY32 and to 100GW by FY47.
Order Book and Prospect Pipeline
As of June 2026, the order book stood at ₹7.8 lakh crore. Infrastructure and utilities account for 45%, conventional energy 28% and green energy 19%. The private sector's share has risen to 40%. For 9MFY27, the company has a prospect pipeline of ₹15 lakh crore (₹7.5 lakh crore domestic, ₹7.5 lakh crore international). L&T has historically held more than 20% market share in this pipeline.
Execution Challenges
Because of the crisis, execution of onshore, hydrocarbon and solar projects in the Middle East has been slow so far. Logistics costs have gone up, though the company hopes to pass them on to clients. According to the report, the impact of the closure of SoH (Strait of Hormuz) is felt more in Qatar and Kuwait. For the large Qatar order, modular fabrication is happening in India and the modules will have to be shipped through SoH by 4QFY27. The Tennet order book is worth ₹600 billion, and its fabrication will also take place in India.
Financial Estimates
The brokerage's estimates put consolidated sales at ₹3,140.5 billion, ₹3,598.6 billion and ₹4,145.4 billion for FY27E, FY28E and FY29E. PAT is estimated at ₹201.0 billion, ₹240.2 billion and ₹285.4 billion, and EPS at ₹146.2, ₹174.7 and ₹207.6. On this basis, P/E works out to 25.3x, 21.2x and 17.8x. ROE is expected to rise from 17.3% to 19.2%. Over FY26-29, core E&C order inflow, revenue, EBITDA and PAT are expected to grow at a CAGR of 10%, 14%, 16% and 17% respectively.
Risks
The brokerage has flagged the following as key risks: continuation of the West Asia crisis and SoH blockage, a slowdown in order inflows, delays in mega projects, a sharp rise in commodity prices, higher working capital needs and increased competition.
What to Watch Next
In the coming quarters, the pace of Middle East projects, execution of the thermal power projects and fresh domestic orders will be key.
Disclaimer: This article presents information based on a Motilal Oswal report. The rating and target price are the brokerage's and not our investment advice. Investments in the stock market are subject to risk. Please consult your financial advisor before investing.
