L&T shares jump nearly 4% after Q3 results; brokerages bullish on long-term growth

Shares of Larsen & Toubro (L&T) surged nearly 4% in early trade on Thursday, bucking a weak broader market, as investors reacted positively to its December quarter earnings. Sentiment was further supported by sustained optimism among brokerages over the engineering major’s long-term growth prospects, aided by an expected pickup in private capex and expansion into new verticals such as data centres, semiconductors and electrolysers.

Extending gains for the third consecutive session, L&T shares climbed by as much as 3.7% to ₹3,935.10 on the BSE, while the company’s market capitalisation rose to ₹5.38 lakh crore. The Sensex heavyweight has risen over 5% in the past three sessions.

Earlier this month, the stock touched a 52-week high of ₹4,194.70 on January 5, 2026, rebounding over 41% from its 52-week low of ₹2,967.65 hit on April 7, 2025. L&T has delivered returns of 14% over the past year and 12% in the last six months, though it remains down over 5% on a year-to-date basis.

For the October–December quarter (Q3FY26), L&T reported a 4.3% year-on-year decline in consolidated net profit to ₹3,215 crore, compared with ₹3,359 crore a year ago. Profit was impacted by the implementation of New Labour Codes, which led to a one-time provision of ₹1,343.76 crore towards employee benefits due to the recognition of past service costs.

Revenue for the quarter rose 10.49% YoY to ₹71,449.7 crore, from ₹64,667.78 crore in the corresponding period last year. Operating performance remained strong, with EBITDA increasing 18.58% YoY to ₹7,417 crore from ₹6,255 crore, while margins improved to 10.38% from 9.67% a year earlier.

Analysts bullish on long-term growth

Brokerages remain broadly constructive, maintaining ‘BUY’ ratings. Valuations are pegged at around 20–22x FY28E core EPS, citing L&T’s improving RoE profile, strong order book, and expanding presence in new-age verticals such as data centres, semiconductors, electrolysers, and defence manufacturing.

PL Capital has maintained a BUY, valuing the core business at 22x Sep’27E PE. The brokerage in its report said that international infrastructure projects delivered healthy execution, while domestic execution was impacted by challenges in central-funded water projects. Energy segment execution remained strong, though cost overruns in select hydrocarbon projects weighed on margins, which are expected to stay soft for the next two to three quarters.

JM Financial noted strong order inflows growth of 17% YoY, significantly exceeding estimates. While core (ex-services) revenue growth was modest and below expectations, high-margin realty sales helped offset margin pressure from legacy energy projects, it said.

The brokerage expects FY26 order inflows to grow 24%, well above management’s guidance of 10%+, driven by Q3 strength and a robust international outlook. It raised FY28E core EBITDA by 3%.

ICICI Securities also highlighted improving RoE and working capital efficiency. At current levels, the stock trades at 20x FY28E core EPS, which the brokerage views as inexpensive versus its historical average of 25x.

Motilal Oswal expects core E&C revenue, EBITDA, and PAT to grow at a CAGR of 16%, 18%, and 22%, respectively. However, it marginally reduced valuation multiples to account for weak execution and lower margins in select segments.

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