Jefferies maintains ‘Buy’ call on L&T, sees 12% upside as revisiting the ESG concern

Jefferies has reiterated its ‘Buy’ recommendation on Larsen & Toubro (L&T) and sees a 12% upside potential, setting a target price of Rs 3400 per share. The bullish stance is anchored in the backdrop of India’s ongoing capital expenditure upswing and L&T’s 45% outperformance compared to the Nifty Year-to-Date (YTD). This has prompted fund managers to explore the possibility of exemptions regarding defense-related concerns associated with holding L&T stocks.

The report also stated that one of the key factors impacting the stock’s performance is the potential for an ESG rating upgrade. An improvement in the ESG rating would not only validate L&T’s commitment to environmental and social responsibility but could also serve as an additional positive catalyst for investors.

L&T’s management is actively engaging in discussions with Environmental, Social, and Governance (ESG) agencies to address and allay concerns related to the company’s defence exposure. This move underscores L&T’s commitment to transparency and sustainability, aligning with global ESG standards.