Shares of Larsen & Toubro (L&T) fell over 5% to the day’s low of Rs 3,440.25 on the NSE on Wednesday following its December quarter earnings where the engineering and construction conglomerate missed estimates of top brokerages on several key parameters.

While Citi and Motilal Oswal have reposed faith on the counter, maintaining a ‘Buy’ stance, Kotak Institutional Equities downgraded the stock to ‘Sell’ from an earlier ‘Reduce’ stance.

On Tuesday, L&T reported a 15.5% year-on-year (YoY) growth in consolidated net profit for the quarter ended December to Rs 2,947.4 crore, but this was sharply lower than an ETNow poll of Rs 3,260 crore. Consolidated revenue from operations rose nearly 19% YoY to Rs 55,128 crore and was higher than the estimated Rs 54,147 crore.

Read more: L&T Q3 Results: Cons PAT rises 16% YoY to Rs 2,947 crore, but trails estimates

Here’s what brokerages recommended:

Citi: Buy | Target: Rs 4,082

Citi maintained a buy view on L&T for a target price of Rs 4,082. It said that healthy order inflows and execution remain the company’s strong points. On Q3 earnings, the outcomes were largely in line though margins were muted. It has expressed hope of improvement in margins over the medium term. The company remains well-placed to benefit from growth in capex in India and Middle East and is Citi’s top pick from a medium-term perspective.

Kotak Equities: Sell: Rs 3,100

Kotak has downgraded the stock to Sell from an earlier Reduce recommendation for a price target of Rs 3,100. L&T reported a 5%/10% miss on profit before tax (PBT) on Kotak’s estimates, despite a beat on revenues. The margin was sub-par, though the orders were boosted by recent wins in the Middle East.”We increase the fair value to Rs 3,100 on 5-8% higher core E&C estimates, 1X higher multiple and roll-forward. We downgrade L&T to SELL (from REDUCE) on expensive 33X one-year forward core EPS multiple,” Kotak said in its post earnings stock review.

Recent/upcoming events make it difficult to be liberal on multiples, given the growing share of overseas business, Saudi Aramco halting growth plans, the share of fixed contracts going up, domestic ordering continuing to disappoint and a case for fiscal consolidation from FY2025, the report said.

Motilal Oswal: Buy | Target: 4,200

Motilal has revised its estimates to bake in improved inflows and lower margins. It increased its target price to Rs 4,200 based on the SOTP methodology, valuing the core business at P/E of 28x March 2026E EPS and a 25% holding company discount for subsidiaries. “Our higher multiple takes into account the continuously improving prospect pipeline and improvements in NWC and RoE, despite margins

being lower than guidance,” Motilal note said as a ‘Buy’ view was reiterated.

The company’s focus on reducing working capital and improving its return profile augurs well.

On Q3 earnings, Motilal noted a margin miss even as revenue beat its estimates.

On the negatives, Motilal listed the slowdown in order inflows, delays in the completion of mega and ultra-mega projects, a sharp rise in commodity prices, higher crude prices, an increase in receivables and working capital, and increased competition are a few downside risks to its estimates.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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