L&T share price drops 4% as Q4 PAT falls 3%

Market reaction: stock hits a three-week low

Shares of Larsen & Toubro (L&T) fell sharply in early trade on Wednesday, May 6, after the company reported its March-quarter (Q4 FY26) results. The stock slid as much as 3.81% to ₹3,900 on the NSE, and was trading 3.01% lower at ₹3,932.3 around 9:36 am. On the BSE, L&T slipped 4% to ₹3,900 in intra-day trade, with the counter also cited as the top loser among Sensex stocks at the time. Reuters reported the drop took the stock to a more than three-week low. The decline came even as L&T posted double-digit revenue growth and a record order book. Investors and analysts, however, focused on profit softness, margin compression, and near-term execution risks linked to geopolitical disruptions.

Q4 FY26 profit declines on high base effect

L&T reported a 3% fall in consolidated profit after tax (PAT) to ₹5,326 crore in Q4 FY26, compared with ₹5,497 crore in the year-ago quarter. The company attributed the year-on-year decline largely to an exceptional gain in the corresponding quarter last year. In its filing, L&T said the previous year included an exceptional gain (net of tax and NCI) of ₹475 crore. Another report cited Q4 FY26 consolidated net profit at ₹5,325.60 crore, broadly in line with the ₹5,326 crore figure. Management also said there was limited impact from the West Asia conflict, according to a post-results call referenced in the coverage. Still, the market’s reaction suggested investors are pricing in a tougher operating environment over the next few quarters.

Revenue rises 11.3%, but margins narrow

Revenue from operations increased 11.3% year-on-year to ₹82,762 crore in Q4 FY26, up from ₹74,392 crore in Q4 FY25. EBITDA rose 5% to ₹8,610 crore versus ₹8,202 crore a year earlier. Despite the EBITDA growth, the EBITDA margin declined to 10.4% from 11.03% in the year-ago period. Broker notes cited in the reports pointed to weaker execution and margin pressures as key reasons for a cautious near-term view. The mixed print left investors balancing strong top-line growth against the near-term cost and execution headwinds.

Order book at record high, Middle East exposure in focus

L&T said its consolidated order book stood at a record ₹740,327 crore as of March 2026, up 28% over March 2025. Reuters added that the Middle East accounted for about 40% of L&T’s $17.82 billion order backlog in the quarter ended March 31. The company also warned that pressures from the ongoing Middle East conflict would build over the next two quarters and could slow revenue growth in the current fiscal year. L&T expects revenue growth of 10-12% for the current fiscal year, according to Reuters. The large backlog provides multi-year visibility, but the geographic concentration means project execution and supply chain continuity in West Asia remain closely watched.

Execution headwinds: revenue slippage flagged

ICICI Securities said Q4 execution was impacted by ₹5,000 crore of revenue slippage due to supply chain disruptions in the Middle East and delays in water projects. That comment helped frame the market’s near-term concerns: the order book is strong, but converting it into revenue on schedule is the key swing factor for margins and earnings. Reuters also cited brokerage views that the quarter was impacted by weaker execution and margin pressures, despite robust order inflows. The focus, therefore, moved from ordering momentum to delivery timelines and profitability.

Dividend announcement: ₹38 per share, record date May 22

L&T’s board recommended a final dividend of ₹38 per share for FY26, subject to shareholder approval. The record date for the final dividend was set as May 22. While dividends typically offer some support to sentiment, the day’s price action indicated earnings quality and forward commentary dominated investor attention.

What brokerages said: targets diverge

Brokerage reactions were mixed, reflecting different interpretations of execution risk, order momentum, and the company’s strategic plans. Emkay Research cut its rating to “Add” from “Buy” and lowered its price target to ₹4,450 from ₹4,800, citing weaker execution and margin pressures. Nomura downgraded the stock to “Neutral” and cut its target price to ₹3,940, citing subdued operating performance and a less optimistic view on FY27 order inflow momentum; it also cut FY27 and FY28 earnings estimates by 8%. HSBC retained a “Hold” rating while lowering its target price to ₹3,800, warning that sustaining large order inflow growth on a high base could be difficult and noting planned investments could weigh on return on equity. Jefferies maintained a “Buy” rating with a target price of ₹4,885, and linked the EBITDA miss to lower engineering and construction revenues tied to the US-Iran-Israel conflict. CLSA kept an “Outperform” rating with a target price of ₹4,842 and highlighted a 22% rise in new orders as a key positive.

Stock performance context: recent drop vs longer-term trend

Reuters said L&T shares have shed about 8.2% since the Iran war began on February 28, compared with a 4.2% drop in the Nifty 50 index. Another market update noted that over the past one month, L&T gained 5.6% versus a 4.6% rise in the BSE Sensex. For calendar year 2026 so far, the stock was down 5% compared with a 9% decline in the benchmark index. A separate report also said the stock remains up 17.8% over the past one year, while the Nifty 50 is down 0.7% during the same period. Taken together, the numbers show the stock has outperformed over longer horizons, even as geopolitical risk has driven sharp short-term moves.

Key numbers at a glance

Why the results matter for infrastructure investors

L&T is often treated as a barometer for India’s infrastructure and capex cycle, so its execution commentary can influence broader sector sentiment. The March-quarter numbers showed a familiar split: strong revenue growth and a record backlog, alongside margin compression and delivery challenges. The Middle East conflict introduced another layer of uncertainty, given the region’s material share of the order backlog and the supply chain disruptions cited by brokerages. Investors now appear to be weighing whether the near-term pressures persist into coming quarters, especially as the company itself flagged higher pressures over the next two quarters.

Conclusion

L&T’s shares fell nearly 4% after Q4 FY26 profit dipped 3% on a high base, while revenue rose 11.3% and the order book touched ₹740,327 crore. The market response reflected concerns around execution slippages, margin pressure, and the impact of the Middle East conflict on near-term growth. Next cues for investors include shareholder approval for the ₹38 final dividend, management’s ability to restore execution pace after the reported ₹5,000 crore revenue slippage, and updates on revenue growth expectations of 10-12% for the current fiscal year.