L&T Share Price Surges Up to 8% After Iran-US Ceasefire: Here’s What’s Driving the Rally

Two-Week Truce Brings Relief to Global Markets

Investor sentiment witnessed a sharp recovery following the agreement made by the American president, Donald Trump, that he would stop attacks on Iran for two weeks provided that there is continuous movement through the Strait of Hormuz. It is also worth mentioning that Iran stated it would stop attacks in case there were no further attacks on them.

This ceasefire was initiated after an ongoing conflict spanning five weeks that resulted in chaos in one of the most important global shipping lanes and instabilities in stock markets. The Israelis also expressed their support for this decision made by America regarding the cessation of attacks, although the same has not been extended to Iran yet.

Middle East Exposure Drives Sentiment Shift

The high penetration of L&T in the Middle East has played an important role in affecting its stock price. Almost 35% of L&T's income comes from the Middle East, and GCC remains an important growth area for the company. There is a lot of investment in artificial intelligence technology, data centres, and urban construction in Saudi Arabia and the UAE.

International Business Remains Core Growth Engines

For the nine-month period ending on December 31, 2025, L&T booked international orders amounting to ₹1,91,084 crore, which accounted for 55% of their total orders. For the December quarter itself, international orders were booked at ₹66,848 crore, which amounted to 49% of their orders, while international revenues were at ₹38,775 crore, accounting for 54% of their total revenues.

Furthermore, West Asia represents 33% of L&T’s revenues and 37% of their ₹7.33 trillion backlog of orders. Of the ₹3.46 trillion orders booked by L&T between April and December FY26, almost one-third of these were from the region.

95% Projects Operational Despite Conflict

The geopolitical instability in the region has had no significant effect on the business operations of L&T. According to L&T management, 95% of their more than 100 projects in West Asia continue to operate while only 5% have been halted due to proximity to areas of conflict. 

Deputy Managing Director Subramanian Sarma noted that no site was ever attacked, and no employee or worker in the region is under any threat of danger. However, he warned that if the disruption continues for three months, there might be a delay in revenue generation.

Short-Term Risks: Logistics and Cost Pressures

As the situation escalated, L&T had warned about disruptions in logistics and supply chains. Increasing input prices and increased insurance costs were mentioned as near-term concerns. The brokerage firm JM Financial pointed out that the crisis might affect L&T’s near-term performance on account of the company’s significant exposure to the region and possible raw material shortages, even in India.

The brokerage firm, however, reiterated that the company’s long-term outlook was still positive, since there were no instances of project cancellations or delayed payments.

Profit Decline in Q3 Despite Stable Operations

In January 2026, L&T reported a 4.2% year-on-year decline in consolidated net profit at ₹3,215 crore for the December quarter, compared to ₹3,359 crore in the year-ago period. The decline was primarily attributed to a one-time provision related to employee benefits under new labour codes.

Looking ahead, the company is expected to build on its Project Lakshya achievements in FY26 and set new targets for FY31. Growth focus areas include defence and precision engineering, thermal power EPC, real estate, semiconductor design, and emerging segments like data centres.

Market Sentiment Turns Positive Again

The reduction in geopolitical tensions not only helped in boosting L&T's performance but also lifted market sentiments. The decrease in crude oil prices due to the ceasefire along with decreased risks have brought back investor sentiments, especially those involved in companies having operations in the Middle East.

As stability has returned to the region, L&T will see better visibility in execution, steady flow of orders, and also some opportunities in infrastructural projects.