L&T to Ramp Up Defence Play to Billion-Dollar Business: Strategy, Impact & Stock Insights
Engineering and construction giant Larsen & Toubro (L&T) has announced a significant strategic shift—L&T to ramp up defence play to billion-dollar business in the coming years. The company, known for its strong presence in infrastructure, heavy engineering, and technology services, now sees immense potential in India's growing defence manufacturing sector.
This move aligns with the Indian government's 'Make in India' and ‘Atmanirbhar Bharat’ initiatives, encouraging domestic companies to take the lead in building indigenous defence capabilities.
In this blog post, we explore the full details behind L&T’s defence business expansion, its implications on the Indian defence ecosystem, and the impact on L&T’s stock performance.
Why Is L&T Expanding in Defence?
The announcement that L&T will ramp up its defence play to a billion-dollar business is no coincidence. With India emerging as the world’s third-largest military spender, the demand for indigenously manufactured weapons, equipment, and technology is soaring.
Key Drivers Behind the Shift:
- India’s push for self-reliance in defence and reduced dependency on imports.
- A ₹1.7 lakh crore defence budget allocation for 2025–26.
- Opportunities in naval platforms, missiles, electronics, drones, and aerospace systems.
- Rising export demand for Indian-made defence tech in friendly foreign nations.
L&T already has a robust defence portfolio that includes:
- Submarine hulls and systems
- Howitzers (K9 Vajra)
- Missile launchers
- Naval warship components
- Radar systems
- UAV and military-grade electronics
With this base, the company aims to scale from its current $600–700 million revenue in defence to over $1 billion in the next few years.
L&T Stock Performance & Market Reaction
L&T Share Price (as of May 2025):
- Current Price: ₹ 3,652.70
- 52-week High: ₹ 3,963.50
- 52-week Low: ₹2965.30
- Market Cap: Approx ₹5.1 lakh crore
- PE Ratio: ~34
- Dividend Yield: ~0.95%
Following the defence announcement, L&T stock showed a mild positive uptick, reflecting investor confidence in the company’s long-term vision. Analysts believe that consistent government orders and rising exports could boost future revenues and profit margins in the defence segment.
What This Means for Investors
For long-term investors, L&T’s deeper foray into defence is a strategic diversification into a high-margin, high-growth sector. The defence vertical typically offers:
- Stable cash flows through long-term government contracts
- High entry barriers due to security and technical requirements
- Growing export opportunities under defence diplomacy
Key Opportunities:
- Government tenders for next-gen warships, drones, missile systems
- Private sector participation under the Defence Acquisition Procedure (DAP)
- Joint ventures with foreign defence majors
Risks to Watch:
- Bureaucratic delays in contract execution
- Policy shifts post-election cycles
- High R&D costs and regulatory compliance
Analyst Views
Brokerage firms like ICICI Direct, Motilal Oswal, and Axis Securities have maintained “Buy” or “Overweight” ratings on L&T with price targets in the range of ₹3,800–₹4,000, citing strong earnings growth visibility across all verticals — especially infrastructure, technology, and now defence.
L&T's Defence Facilities & Capabilities
L&T Defence operates from advanced, state-of-the-art facilities such as:
- Hazira (Gujarat) – shipbuilding and submarine hulls
- Talegaon (Maharashtra) – missile integration and aerospace
- Coimbatore (Tamil Nadu) – control systems and electronics
- Vizag (Andhra Pradesh) – marine equipment and modules
These plants already work with the Indian Navy, DRDO, and ISRO, and now aim to serve the global defence supply chain.
Geopolitical Significance
L&T’s increased defence focus also aligns with India’s global ambitions:
- Boosting exports to friendly nations in Southeast Asia, Africa, and the Middle East
- Supporting India’s role as a net security provider in the Indo-Pacific region
- Collaboration with foreign OEMs for co-development and co-production of military tech
Final Thoughts
The move by L&T to ramp up defence play to billion-dollar business is a game-changer not just for the company, but for India's strategic and industrial goals. As the global defence landscape evolves and India positions itself as a hub for indigenous military manufacturing, L&T is well-positioned to capture the next wave of growth.
For investors, this is a sector to watch closely — with L&T offering both stability and high-growth potential.