Shares of Larsen and Toubro came under sharp selling pressure on March 4, falling to a five week low as escalating geopolitical tensions in the Middle East rattled broader markets and raised concerns about the stability of international project pipelines.

The stock dropped more than 7 percent during morning trade, emerging as the top loser on the Nifty index. Around 10:25 am, the shares were trading near Rs 3,760 apiece while the benchmark Nifty index itself was down about 1.8 percent, reflecting risk aversion across equities.

The decline marks a continuation of recent weakness in the engineering and construction major’s stock price. Over the past four trading sessions, the shares have corrected roughly 12.5 percent as global geopolitical risks intensified and investors reassessed exposure to companies with significant overseas operations.

The immediate trigger appears to be mounting tensions in the Middle East, a region that represents a key growth geography for Larsen and Toubro’s projects and infrastructure business.

The company has built a large international order book over the past decade, particularly across the Gulf Cooperation Council (GCC) region. According to data disclosed by the company in January 2026, international orders accounted for Rs 1,91,084 crore during the nine months ended December 31, 2025, representing about 55 percent of total order inflows.

In the December quarter alone, international orders stood at Rs 66,848 crore, contributing around 49 percent of the company’s order inflow for the period. International revenues also remained significant, amounting to Rs 38,775 crore and representing roughly 54 percent of consolidated revenues.

This high share of overseas business has historically been viewed as a strength, allowing the company to diversify beyond domestic infrastructure cycles and capture large-scale energy, urban development, and industrial projects in global markets. However, it also exposes the company to geopolitical and macroeconomic risks in regions where it operates extensively.

The Middle East remains one of the most important geographies for Larsen and Toubro’s project execution. In its December quarter investor presentation, the company had highlighted strong growth prospects in the GCC region, citing large investments in artificial intelligence infrastructure, data centres, and urban development projects across Saudi Arabia and the United Arab Emirates.

Such investments were expected to drive future order inflows for the company’s engineering and construction segments. However, heightened geopolitical tensions in the region have now introduced a layer of uncertainty around investor sentiment, particularly in the near term.

Alongside geopolitical concerns, the company had already reported some pressure on profitability in the December quarter. Larsen and Toubro posted a consolidated profit after tax of Rs 3,215 crore for the quarter, down 4.2 percent from Rs 3,359 crore in the corresponding period a year earlier.

The decline was largely attributed to a one time provision related to employee benefits following the implementation of new labour codes in India. The company made an exceptional provision of Rs 1,191 crore during the quarter to account for these obligations.

While the provision was classified under exceptional items and therefore not reflective of core operational performance, it nevertheless weighed on reported earnings and drew investor attention to near term cost adjustments.

From a broader market perspective, the sharp correction in the stock underscores the sensitivity of globally diversified Indian infrastructure companies to geopolitical developments. Larsen and Toubro’s large overseas exposure has been a key driver of growth, but events in international markets can influence investor risk perception even when the company’s project pipeline remains intact.

For Indian markets, the move also reflects how geopolitical shocks can spill over into sector specific stocks, especially those tied to global infrastructure spending and energy linked regions.