L&T shares fall 4% as Q4 profit dips on West Asia risks

Stock slides to a three-week low

Shares of Larsen & Toubro (L&T) fell sharply in Wednesday’s intra-day trade, with the stock slipping as much as 4% to ₹3,900 on the BSE. At around 09:20 AM, it was quoted 3.6% lower at ₹3,910.50, even as the BSE Sensex was up 0.56%. L&T was the top loser among the benchmark index constituents at that time.

The decline followed L&T’s Q4 FY26 earnings announcement a day earlier and a fresh wave of brokerage notes flagging near-term execution challenges. Reuters also reported that the stock fell to a more than three-week low after the company warned that the ongoing Middle East conflict would slow revenue growth in the current fiscal year.

What the company reported for Q4 FY26

L&T reported a 3% year-on-year decline in consolidated net profit to ₹5,325.60 crore for the fourth quarter of FY26. The company attributed the decline in profit during the quarter to exceptional year-on-year gains.

The result set the context for the market reaction because L&T is widely tracked as a barometer of India’s infrastructure cycle. The quarterly print also came alongside commentary around project conditions in West Asia, a key geography for the group’s engineering and construction operations.

Execution concerns highlighted by analysts

ICICI Securities said L&T’s overall performance continues to show strong ordering momentum and healthy execution, supported by a robust order book. At the same time, it flagged that Q4 execution was impacted by revenue slippage of ₹5,000 crore due to supply chain disruptions in the Middle East and delays in water projects.

That combination of a strong longer-cycle outlook and near-term operational friction shaped the market’s focus on execution risks. Reuters reported that L&T flagged that pressures from the Middle East conflict would build over the next two quarters.

Order book and bid pipeline: strong visibility, uneven near-term delivery

ICICI Securities noted L&T’s order book stood at ₹7,40,000 crore, which it said provides multi-year visibility. It also pointed to a large bid pipeline of around ₹17,80,000 crore, alongside strategic investments, as factors supporting the longer-term positioning.

But broker commentary repeatedly returned to near-term delivery constraints. Even with most sites operating, logistics and supply chain uncertainty in West Asia was highlighted as a key variable for execution over the coming quarters.

West Asia disruption and pipeline comparison

ICICI Securities said that despite disruption due to the West Asia crisis, the prospect pipeline remains strong at ₹17,80,000 crore for FY27 versus ₹19,00,000 crore for FY26. The comparison signals that while opportunity remains, the environment has become more uncertain for the pace and timing of conversion.

Separately, Nuvama Institutional Equities said nearly 95% of L&T's West Asia sites operated normally through March, but it warned that a prolonged closure of the Strait of Hormuz may add to logistic costs and potential raw material shortages in the June quarter.

Broker actions: target prices reset, ratings turn cautious

Multiple brokerages revised their views after the results and the conflict-linked commentary.

Motilal Oswal Financial Services (MOFSL) said it revised estimates to factor in the expected divestment of Hyderabad Metro and Nabha power by Q1 FY27. It also baked in lower order inflows and execution for FY27, along with a stronger recovery in FY28 in the Middle East for reconstruction-led demand.

MOFSL added that, after rolling forward to June 2028, it arrived at a revised sum-of-the-parts (SoTP) target price of ₹4,550, up from ₹4,200 earlier, based on 25x two-year forward earnings for the core business and a 25% holding company discount to subsidiaries.

Reuters reported that Emkay Research cut its rating on L&T to “Add” from “Buy” and reduced the price target to ₹4,450 from ₹4,800.

Where key numbers stand

Target prices and rating changes mentioned

Why the move matters for the sector

L&T’s market moves are closely watched because the company is often treated as a proxy for the domestic infrastructure and capex cycle. The Wednesday decline was notable because it came alongside a broader market rise, highlighting that the reaction was stock-specific and driven by near-term execution and regional risk.

The broker notes also show a common thread. Long-cycle visibility remains anchored by a large order book and pipeline, but near-term delivery is being scrutinised due to Middle East supply chain disruptions, logistics risk around key shipping routes, and project timing uncertainties.

Related read-through: L&T Technology Services also sees caution

Separately, ICICI Securities cut its target price on L&T Technology Services (LTTS) to ₹3,380 from ₹3,550 while maintaining a ‘Hold’ rating, after Q4 FY26 results. The brokerage cited a Q4 revenue miss linked to the divestment of the Smart World and Communication (SWC) business.

The note also referenced management’s 13%-15% revenue CAGR outlook, while ICICI Securities estimated FY27 revenue growth would likely be in the mid-single digits amid the strategic pivot, leadership changes, and macro uncertainty. (This segment relates to LTTS, not L&T Ltd’s core EPC operations.)

Conclusion

L&T’s 4% intra-day fall to ₹3,900 came as investors weighed a Q4 FY26 profit decline, company commentary that the Middle East conflict could slow revenue growth, and multiple brokerage revisions highlighting near-term execution headwinds. The next key monitorables, as flagged in reports, include execution trends over the next two quarters, the trajectory of West Asia-linked disruptions, and the expected divestments of Hyderabad Metro and Nabha power by Q1 FY27.