Shares of tanked 7.5 per cent in early trade on Wednesday, marking their fourth consecutive session of losses amid rising concerns over the company’s exposure to the West Asia and potential margin pressures.
At 9.57 am, the stock traded at ₹3,774.60 on the NSE, down 7 per cent, after hitting an intraday low of ₹3,760 compared with its previous close of ₹4,066.70.
The sharp decline comes as investors reassess risks linked to geopolitical tensions in the Gulf region and their possible impact on order execution and profitability.
L&T traded as the top loser of Nifty 50
Global brokerage Macquarie maintained an outperform rating on L&T with a target price of ₹4,910 but cautioned about rising risks to margins.
The brokerage noted that 37 per cent of L&T’s order book was directly from West Asia at the end of Q3FY26, while 33 per cent of order inflows in 9MFY26 came from the region.
It highlighted that the company’s total exposure to the Gulf has increased materially over the years, with 55 per cent of the Gulf order book based on fixed-price contracts.
Macquarie said evolving scenarios in the Gulf region pose a risk to L&T’s margins, especially given the fixed-price nature of a significant portion of contracts.
It added that it had already flagged geopolitical developments, commodity volatility and AI-led disruption as key risks for the company. While it is difficult to quantify the exact margin impact at this stage due to the fluid situation, the brokerage said a margin drop appears certain as a potential fallout of the ongoing Gulf conflict.
On the other hand, CLSA also retained an outperform rating on the stock with a target price of ₹4,842, viewing the recent weakness as a cyclical buying opportunity. The brokerage described L&T as an emerging global energy infrastructure builder and argued that concerns around the Middle East are overdone.
CLSA’s analysis suggests that a potential blockade of the Strait of Hormuz for the whole of March could shave 1.8 per cent off L&T’s consolidated earnings per share. However, it pointed out that the stock has corrected significantly more and is now among the cheapest large-cap industrial names in India.
The brokerage underscored that L&T has navigated past crises by shifting its market focus from Indian government capex to the Middle East, and later to Europe and domestic private capex.
This diversification helped drive order inflows up 18 per cent year-on-year in 3QFY26, even as new Middle East orders fell 70 per cent year-on-year. CLSA also expects domestic execution to improve as the impact of the excessive monsoon recedes.
With a US$81 billion backlog, up 30 per cent year-on-year, CLSA believes L&T’s order book remains solid despite perceptions of a slowdown in the Middle East, providing medium-term visibility even as near-term volatility persists.
Kotak Institutional Equities said interactions with Larsen & Toubro indicate a strong push to expand its geographical footprint, including offshore wind projects in Europe and Japan, and deeper engagement with existing clients in new markets such as Central Asia and North Africa.
However, Kotak expects the pace of EBITDA margin expansion to remain limited over the next two years, given that renewables and thermal projects — which account for about 20 per cent of the order backlog — are relatively low-margin. That said, renewable projects in the Middle East typically have shorter 18–24 month execution cycles and favourable payment terms, supporting return on capital employed.
Over the medium term, Kotak sees opportunities from the recently announced seven high-speed rail projects worth ₹810 trillion excluding rolling stock, rising defence spending, and full-scale nuclear ordering expected over the next one to two years.