L&T shares fall 7% on Middle East exposure: CLSA bullish
Larsen & Toubro (L&T) shares were trading as much as 7% lower on Wednesday. The drop came after Macquarie flagged risks to L&T's profit margins because so much of its business is tied up in the Middle East—an area facing conflicts and fewer new orders.
But not everyone is worried: CLSA suggests this dip could be a good entry point for investors interested in infrastructure.
Macquarie sees risk to margins, EPS
Macquarie pointed out that 37% of L&T's latest order book depends on the Middle East, noting that 55% of the Gulf order book comprises fixed-price contracts, which it flagged as a margin risk.
CLSA notes new Middle East orders in Q3FY26 plunged about 70% year-on-year. Still, CLSA said a complete blockade of the Strait of Hormuz through March could reduce L&T's consolidated EPS by about 1.8% and notes L&T is shifting focus toward Indian and European projects.
Both brokerages actually rate L&T as "Outperform," with price targets above current levels—so despite short-term jitters, there's long-term confidence in the company's $81 billion backlog and growth plans.