Jefferies Downgrades L&T Target Price Amid West Asia Tensions
Global brokerage firm Jefferies has revised its stance on Larsen & Toubro (L&T), maintaining a buy rating but slashing the target price to Rs 4,500 from Rs 4,715 previously. This adjustment reflects heightened risks associated with the ongoing Iran-US-Israel conflict, which has negatively impacted global engineering and construction companies with exposure to the West Asia region.
Significant Order Book Exposure to West Asia
Analysts highlighted that L&T has a substantial 37% of its order book tied to West Asia, with Saudi Arabia alone accounting for over 75% of this segment. Since the conflict escalated, companies in this sector, including L&T, have seen their stock prices decline by 10-24%. Jefferies estimates that a mere one-month work stoppage in the region could reduce L&T's earnings per share for fiscal year 2026 by 6-8%.
However, the firm remains optimistic about a potential recovery. Assuming normalcy returns to West Asia over time, L&T is expected to regain most of its share price losses. This recovery would be driven by anticipated growth in order flow, stable margins, and the unveiling of a five-year strategic plan scheduled for May 2026.
Other Brokerage Updates on Key Indian Stocks
BoFA Securities Bullish on AB Capital
BoFA Securities has issued a buy rating on AB Capital with a target price of Rs 380. Analysts pointed to strong growth tailwinds in the company's lending operations, supported by government measures aimed at expanding the MSME sector. Additionally, retail penetration in the housing finance segment is showing improvement. The company is focused on gaining market share, with moderation in equity market share losses in its asset management business and robust premium growth in insurance. AB Capital targets a return on assets of 2.5% for its NBFC business and 2-2.2% for its HFC business in the coming quarters, which could lead to a valuation re-rating.
Goldman Sachs Cautious on Sun Pharmaceuticals
Goldman Sachs has assigned a sell rating to Sun Pharmaceuticals with a target price of Rs 1,550. Following the company's corporate day, analysts noted that innovative medicines remain a key growth driver, with emerging markets and the rest of the world demonstrating sustained outperformance. In India, the company aims to grow in line with or slightly ahead of the market, though recent market share gains of 30 basis points in Q3 may normalize. Importantly, Sun Pharma has minimal exposure to West Asian markets, and its Israel operations continue uninterrupted despite regional conflicts. The company's M&A strategy prioritizes profitable growth, focusing on innovative medicines and emerging market assets, with no explicit size cap but maintained financial discipline. Management anticipates significant competition and pricing uncertainty for GLP-1 launches, with no guidance on margin impact.
Kotak Institutional Equities Positive on Bajaj Finance
Kotak Institutional Equities has given an add rating to Bajaj Finance with a target price of Rs 1,100. Analysts warned that investors' myopic focus on near-term trends and credit metrics risks overlooking a structural transformation underway at the company. Fin-AI initiatives are transitioning from experimentation to measurable business outcomes, reflecting a broader 'quarterly trap' where durable shifts in business models are underweighted. The firm remains assertive about Bajaj Finance's ability to sustain high growth and return on equity despite its large balance sheet.
Motilal Oswal Securities Neutral on Havells India
Motilal Oswal Securities has maintained a neutral rating on Havells India with a target price of Rs 1,490. Analysts expect short-term softness followed by medium-term recovery. The cables & wires segment is experiencing strong demand, though near-term margin pressures persist. In the Lloyd division, inventory normalization is in progress, but demand recovery is still awaited. For electrical consumer durables, switchgear, and lighting divisions, pricing actions are supporting margins amid mixed demand trends.
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