L&T Share Price: After increasing geo-political tension in the Middle East, L&T shares have been affected…
L&T Share Price: Selling pressure in the shares of the country’s leading infrastructure company L&T continued for the second consecutive day. On Wednesday, March 4, the stock fell to ₹3760.10 intraday. The stock has fallen nearly 12% in the last two trading sessions. The company’s market cap declined by nearly ₹70,000 crore to ₹5.33 lakh crore.
In Wednesday’s trading session, Larsen & Toubro shares fell 4.57% to close at Rs 3880.50.
Selling pressure on Larsen & Toubro came as geopolitical tensions increased in the Middle East after the US and Israel attacked Iran and Iran retaliated with strikes around the Gulf. Larsen & Toubro has significant exposure and business interests in the Gulf and Middle Eastern region.
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Why increased pressure on shares?
L&T shares have been affected after increasing geopolitical tensions in the Middle East. Following the attacks on Iran by the US and Israel, retaliation has intensified in the Gulf region. L&T has a large business presence in the Gulf and the Middle East, which has raised investor concerns. The Middle East has a major share in the company’s order book.
According to global brokerage Macquarie, 37% of L&T’s total order book at the end of Q3 came from the Middle East. In the first 9 months of the current financial year, 33% of the order intake was from this sector. The company’s Gulf region projects are largely based on fixed-price contracts, which could put pressure on margins in the event of cost overruns.
Effect of closure of Hormuz Strait
Brokerage CLSA estimates that if the blockage in the Strait of Hormuz continues for the month of March, L&T’s gross EPS could decline by about 1.8%. However, CLSA believes that the current weakness is actually cyclical, not structural. According to the brokerage, at the current level L&T looks the cheapest among large cap stocks.
Support from strong order backlog
- The company’s gross order backlog is approximately $81 billion, up 30% year-on-year.
- Total order inflows recorded 18% YoY growth in Q3FY26, although new orders from the Middle East declined 70% YoY.
- Experts are hopeful that the situation may improve in the future due to improvement in domestic execution.
Q3 How were the results?
According to the quarterly results announced in January-
- Net profit declined by 4.29% to Rs 3,926 crore.
- Total revenue increased by 10.49% to Rs 71,450 crore.
- International revenue stood at Rs 38,775 crore, which is 54% of the total income.
The company made a one-time provision of ₹1,191 crore due to the implementation of the new labor code, which was shown as an ‘exceptional item’.
The stock may remain volatile until conditions in the Middle East normalize, although a strong order book and diversification of the business may support L&T in the long term. Investors will now keep an eye on regional conditions and cost pressure.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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