Geojit Investments has reaffirmed its BUY rating for infrastructure major Larsen & Toubro (LT), with a revised target price of Rs. 4,409, offering a potential return of approximately 12 percent from the current market price of Rs. 3,953. The research report highlights robust Q2FY26 performance driven by a 10.4% revenue growth, buoyed by significant order inflows and strong sectoral contributions from energy, hi-tech manufacturing, and IT services. Despite a slight compression in EBITDA margins, the company’s diversified portfolio, healthy order book valued at Rs. 6.67 lakh crore, and strategic ventures into renewables and defense position LT for sustained long-term growth. Investors are advised to consider LT for portfolio appreciation, with clearly defined support and resistance levels indicated in the technical analysis.

Robust Quarterly Performance Supports Buy Call

Larsen & Toubro Ltd demonstrated a 10.4% year-over-year growth in consolidated revenue in Q2FY26, reaching Rs. 67,984 crore. This growth was principally driven by surges in the energy sector (+47.5%), hi-tech manufacturing (+30.1%), and IT services (+11.6%). However, the infrastructure segment saw a marginal decline of 0.6%. EBITDA grew by 7% YoY to Rs. 6,806 crore despite a slight margin contraction of 30 basis points to 10%, primarily due to pressures in the IT services portfolio. The PAT registered a robust 14% increase to Rs. 4,687 crore, supported by higher operating income and reduced financing costs. These financial markers affirm LT’s operational strength and earnings resilience, justifying Geojit's BUY recommendation at current valuations.

Order Book and Inflow Vitality

The company showcased exceptional order inflow growth of 45% YoY, with Rs. 1.16 lakh crore recorded in Q2FY26. The order book now stands at an impressive Rs. 6.67 lakh crore, underpinning future revenue visibility. Domestic orders accounted for 51% of the book, while the Middle East contributed 41%, signifying LT’s strong international presence. Noteworthy is the inflow contribution by infrastructure (46%), energy (33%), and services (16%) sectors, reflecting balanced business verticals. LT’s diverse geographic and sectoral portfolio mitigates risk and supports stable long-term growth prospects.

Strategic Industry Positioning and Growth Catalysts

LT’s strategic investments in renewables, green energy, defense, and semiconductor sectors forecast significant growth avenues. These ventures align with government initiatives and global industry trends emphasizing sustainability and self-reliance. The company’s engineering and construction prowess, coupled with technological capabilities, provide a competitive edge to capitalize on increased public and private infrastructure spending, particularly in India and the Middle East. LT’s ability to diversify its revenue streams enhances its fundamental strength and future earnings potential.

Valuation and Price Targets

Geojit derives the target price of Rs. 4,409 based on a Sum-of-the-Parts (SOTP) valuation approach incorporating various business segments with respective multiples: core engineering construction at a PE of 23x, financial services, hydrocarbon, IT services, and other subsidiaries. The target reflects a 12% upside from the current market price of Rs. 3,953. The strong fundamentals, consistent order book growth, and operational efficiency reserve a compelling equity case for investors over the next 12 months.

Key Financial Metrics & Estimates

Technical Levels and Trading Strategy

From a technical standpoint, LT stock currently trades around Rs. 3,953. The report suggests key support near Rs. 3,600, offering a cushion against downside risks in the near term. Resistance is marked around Rs. 4,100 to Rs. 4,150, testing which could trigger the next upward leg toward the target of Rs. 4,409. Traders are advised to accumulate on any corrections to the support zone with a medium-term horizon, riding the momentum on the back of strong fundamentals and sectoral tailwinds.

Outlook and Risks

LT’s outlook remains bullish given its solid order book, diversified business, and alignment with government infrastructure and green energy thrusts. However, margin pressures in IT services and potential delays in infrastructure project execution pose moderate risks. Geopolitical uncertainties in international markets could influence order inflows and revenue growth. Investors should closely monitor quarterly earnings releases, margin trends, and macroeconomic developments impacting capital expenditure cycles.

Bottomline for Investors

Geojit Investments Ltd’s reiteration of a BUY call on Larsen & Toubro Ltd at Rs. 4,409 underscores LT’s position as a key beneficiary of India’s infrastructure-led growth story and the expanding global footprint. Its robust financial performance, solid order book, and strategic diversification into high-growth sectors encourage investors to consider LT as a core equity holding. With attractive valuations and clear tactical levels, it presents a compelling investment opportunity for medium to long-term market participants seeking steady alpha generation.