CHENNAI: Shares of Larsen & Toubro (L&T) declined in Monday’s trade after Bank of America (BofA) issued a rare double downgrade on the stock, citing limited upside following a sharp rally in recent months.
BofA cut its rating on L&T from Buy to Underperform and reduced its target price to Rs 3,700. The brokerage noted that while recent developments such as the company’s exit from the Hyderabad Metro project are positive for earnings and return on equity, much of the good news is already reflected in the stock price.
At 11.29 AM, the stock was trading at Rs 3,714 a unit, down 0.40 percent on NSE.
Analysts at BofA also raised their earnings estimates for FY26–28 by 3–4 percent to factor in margin improvements. However, they cautioned that further expansion in margins or significant working capital gains may be difficult to achieve in the current environment.
The report flagged potential risks including slower domestic capex momentum and weaker crude oil prices, both of which could affect L&T’s future order inflows. It added that the recent rally has stretched valuations, limiting the stock’s risk-reward potential.
Market participants will now watch L&T’s upcoming project wins and order book trends to gauge whether the company can deliver further growth despite a challenging macro backdrop.