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We reiterate our positive stance on Larsen & Toubro (L&T) and maintain BUY with an unchanged SOTP-based TP of Rs4,400. L&T is steadily expanding its global footprint, building on its Middle East momentum and gaining traction in Europe. At the same time, the company is enhancing its Hi-Tech manufacturing capabilities, having entered a partnership with General Atomics Aeronautical Systems, Inc for a MALE RPAS program, and preparing to jointly bid for the 5 th -generation of fighter aircrafts under the AMCA program. We believe these strategic moves position the company for sustained long-term growth. Additionally, L&T has secured a licensed manufacturing contract for the BvS10 platform from the Indian Army, further strengthening its defense portfolio. 1HFY26 core order inflow grew 48% YoY to Rs1.7trn. L&T is already L1 in 3 projects worth USD4.5bn in Kuwait, with the prospective pipeline for the rest of FY26 still strong at Rs10.4trn (+29% YoY), comfortably overachieving its initial guidance of 10% growth in order inflow

Gaining traction in European renewables and electrification L&T’s offshore wind business, in collaboration with Hitachi Energy, secured a crucial role in the HVDC offshore wind program of TenneT, the Dutch-German transmission system operator. L&T has been nominated to deliver state-of-the-art HVDC converter stations. Solar energy expansion in Germany has exceeded all forecasts for years, reaching over 100GW of capacity. However, grid expansion cannot keep pace with this rapid growth which is putting increasing strain on grid and system stability.

Tapping into defense opportunities L&T is actively tapping into a robust pipeline of defense opportunities, bolstered by the government’s strong indigenization push. The company has partnered with General Atomics Aeronautical Systems, Inc for a 87-unit MALE RPAS program, an opportunity estimated at around Rs200-300bn. The project aims to significantly boost the country's surveillance and reconnaissance capabilities across land and maritime borders. It is also jointly bidding with Bharat Electronics for the 5th -generation fighter aircraft under the AMCA program, with an initial opportunity size of ~Rs150bn. In addition, L&T has secured a licensed manufacturing contract for the BvS10 platform from the Indian Army, further reinforcing its expanding defense portfolio.

FY26 order inflow guidance to be overachieved For FY26, L&T had guided for 10% YoY growth in order inflow. 1HFY26 core order inflow jumped 48% YoY to Rs1.7trn. L&T is already L1 in 3 projects worth USD4.5bn in Kuwait, with the prospective pipeline for the rest of FY26 still strong at Rs10.4trn (+29% YoY), comfortably overachieving its initial guidance. We have built 16% YoY growth in core OI for FY26E.

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