L&T shares down 5% in Q2 so far despite ₹1.48 lakh crore order inflows; is the firm gearing up for growth next?

Larsen & Toubro (L&T) shares have declined 5% so far in the second quarter (Q2) of the financial year 2026-27 due to equity investors exercising caution amid geopolitical uncertainties in the company’s key international market segment, the Middle East.

NSE data showed that L&T shares have lost 5.1% to ₹3,929.90 apiece as of the market close on Wednesday, September 23, in comparison to ₹4,143.40 per share, the company’s closing price level at the beginning of Q2 FY27 or July 2026.

In the Q1 earnings, the company’s operating profit dropped 3% YoY to ₹6,116 crore, while the EBITDA margins contracted by 90 basis points (bps) to 9% from their year-ago levels, indicating the impact of higher energy prices and supply chain disruptions.

Companies like L&T are highly sensitive to energy prices and supply chain dynamics, as any surge in raw material costs and logistical expenses has a direct impact on company margins.

Despite the added geopolitical pressure and elevated oil prices weighing down the operating profit and margins since the beginning of the US-Iran conflict, the conglomerate has secured total orders valued at ₹1.48 lakh crore in the second quarter.

Looking ahead, market experts predict that Larsen & Toubro is gearing up for growth in the upcoming period with steady execution in the company’s Middle East business, India’s domestic capex push, and strong order book momentum.

₹1.48 lakh crore orders in Q2 so far

Since the first order for the second quarter back on July 20, 2026, the company has secured a total of 14 orders from several companies, both domestic and international, with the latest one being from ONGC on September 9, 2026.

“The Middle East forms 36% of total inflows,” said analysts from Antique Stock Broking, an institutional brokerage firm catering only to hedge funds, FIIs, mutual funds, among other high-net worth clients.

While market analysts predict growth potential ahead, CLSA analysts said that the new growth opportunities for EPC companies and developers following two global energy price shocks have translated into L&T recording the highest-ever quarterly order inflows in Q2 FY27.

Growth potential ahead?

Experts from the US-based investment firm, JP Morgan, predict that L&T is gearing up for growth in the upcoming period, with the order execution factor in the company’s Middle East market continuing without any major disruption.

“Customers are, by and large, accommodating cost increases due to the impact of the conflict as L&T continues to focus on deepening its strong relationships with customers through this turbulent period,” said JP Morgan analysts.

In India, the experts predict that the public sector capex is expected to pick up pace after a period of consolidation, while the private sector capex is already receiving momentum led by large orders from thermal power operators.

“L&T is being positioned for mid-teens growth with healthy RoE in traditional and emerging areas,” said JP Morgan analysts.

The company’s management is focused on expanding the conglomerate to new areas of data centres, green energy and electronic manufacturing, with aims to double the company’s defence revenues by the year 2031.

In line with the outlook, CLSA analysts also said that the Middle Eastern countries are in a hurry to monetise their reserves and hence are increasing their gas capex, which is adding another growth catalyst for L&T in its primary international market.

“India is not behind and has launched massive Capex to secure energy, driving L&T’s orders,” said CLSA analysts. “L&T’s FY31 plan touches all the right chords of wealth creation, from building an AI business to expanding into EMS, green tech and chemistry.”

While the company’s management is targeting 12-15% revenue growth and a 10-20 bps margin improvement annually, experts from Antique expect the RoCE profile to remain comfortably above 25%, with future returns dependent on the working capital trajectory and margins.

Latest buzz

A recent Wall Street Journal report mentioned that the US federal government is planning to invest $5 billion in a fund to help rebuild energy infrastructure in the Middle East. As per the report, the proposal could also involve matching contributions from eight Middle Eastern countries, potentially creating a $10 billion fund.

How have L&T shares performed?

In the long term, NSE data showed that L&T shares have delivered 122% returns to investors in the last five years, and over 34% gains on their investment in the last three-year period.

Although the stock has risen 7.4% in the past year, L&T shares were down 5% year-to-date (YTD) in 2026. The exchange data also showed that the stock has lost 4% in the last month and was trading 3.2% higher in the last five sessions.

The company’s market capitalisation (m-cap) was at ₹5.40 lakh crore as of the stock market close on Wednesday, September 23, 2026.