LKP Research has issued a buy rating on Larsen and Toubro Ltd (L&T) with a target price of ₹4620 in its research report dated May 07, 2026. According to the research report, the recommendation is based on the company's strong order backlog, improving capital efficiency, and long-term growth visibility across core and emerging businesses.
L&T delivered a relatively subdued operating performance in Q4FY26, as execution challenges and cost pressures weighed on profitability despite healthy revenue growth. Consolidated revenue increased 11.3% YoY to ₹828bn, which was below the company's earlier expectation of approximately 15% growth. EBITDA margin for the quarter declined 62 basis points YoY to 10.4%, impacted by an unfavourable execution mix and higher operating costs.
Within the core E&C segment, EBITDA margin contracted 50 basis points YoY to 9.4%, primarily due to elevated logistics and insurance expenses along with a changing revenue mix. On a full-year FY26 basis, core EBITDA margin stood at 8.3%, slightly below management's 8.5% guidance. Management indicated that geopolitical disruptions in the Middle East impacted execution during March, typically a peak execution month, resulting in an estimated revenue loss of approximately ₹50bn in Q4FY26.
Despite the current challenges, management clarified that no projects have been cancelled and payment cycles remain intact. LKP Research maintains its bullish stance, valuing the core business at 23x FY28E EPS to arrive at the target price of ₹4620. The research firm expects the company to benefit from improving capital efficiency and long-term growth visibility across its core and emerging business segments.
