Larsen & Toubro Receives BSE and NSE Observation Letters for Proposed Scheme of Arrangement

Larsen & Toubro Limited has received crucial regulatory approvals for its proposed scheme of arrangement with L&T Realty Properties Limited, marking a significant step forward in the corporate restructuring process. The company announced receipt of observation letters from both BSE Limited and the National Stock Exchange of India Limited on March 19, 2026.

Regulatory Approval Timeline

The development follows the Board of Directors' approval of the scheme of arrangement on December 08, 2025, between Larsen & Toubro Limited (Transferor Company) and L&T Realty Properties Limited (Transferee Company) along with their respective shareholders and creditors. Subsequently, applications were filed with both stock exchanges under Regulation 37 of the SEBI Listing Regulations seeking their observation letters.

Exchange Letter Date Status BSE Limited March 18, 2026 No adverse observations NSE Limited March 19, 2026 No objection Validity Period Six months From respective letter dates

Key Regulatory Requirements

Both exchanges have outlined comprehensive compliance requirements that must be fulfilled. The primary conditions include ensuring compliance with Regulation 11 of SEBI LODR Regulations, 2015, and mandatory disclosure of all ongoing adjudication and recovery proceedings against the company, its promoters, and directors before NCLT and shareholders.

Critical Disclosure Requirements

The exchanges have mandated extensive disclosures to public shareholders, including:

Rationale for the slump sale of realty undertaking and cost-benefit analysis

Details of registered valuers and merchant bankers involved

Latest financials not older than six months from the date of stock exchange approval

Pre and post-scheme shareholding patterns with detailed explanations

Revenue, PAT, and EBITDA details for the last three years

Value of assets and liabilities being transferred

Potential benefits and risks associated with the transaction

Compliance and Next Steps

The observation letters specify that any proposed equity shares issued under the scheme must be in demat form only. Additionally, no changes to the draft scheme can be made without specific written consent from SEBI, except those mandated by regulators, authorities, or tribunals.

Requirement Details NCLT Filing Deadline Within six months of letter dates Financial Data Currency Not older than six months Share Form Demat form mandatory Website Disclosure Within 24 hours of receiving letters

Important Disclaimers

Both exchanges have clarified that submission of documents should not be construed as approval of the scheme's financial soundness or correctness of statements. The exchanges reserve rights to withdraw observations if information is found incomplete, incorrect, misleading, or false, or for any contravention of regulations.

The company has confirmed that copies of the observation letters are available on its investor website and has requested stakeholders to take note of this significant regulatory milestone in the proposed corporate restructuring.

Larsen & Toubro shares have declined 18% amid concerns over Middle East project execution, but Goldman Sachs maintains its optimistic stance on the engineering conglomerate with a Buy rating and target price of Rs 4420.

Goldman Sachs Rating and Target Price

Despite the recent stock weakness, Goldman Sachs has retained its Buy recommendation on Larsen & Toubro with a target price of Rs 4420. The brokerage's confidence in the stock persists even as the company faces near-term execution challenges.

Key Concerns Impacting Stock Performance

Several factors have contributed to the 18% decline in Larsen & Toubro's stock price:

Challenge Area: Impact Details Middle East Projects: Execution concerns affecting investor sentiment Regional Capex: Potential slowdown in Middle East capital expenditure Revenue Impact: Expected Q4 revenue hit from project delays Execution Timeline: Weak Q1FY27 execution anticipated

Significant Order Inflow Revision

Goldman Sachs has made a substantial revision to its core order inflow projections for FY27E, cutting the growth estimate from 7.7% to 1.1%. This dramatic reduction reflects the brokerage's more cautious outlook on near-term order booking capabilities amid regional uncertainties.

Medium-Term Outlook Remains Positive

Despite the current headwinds, Goldman Sachs believes Larsen & Toubro's medium-term prospects remain intact. The brokerage views the current challenges as temporary, with project deferrals expected to be short-term in nature rather than permanent cancellations.

The engineering major's diversified portfolio and strong execution capabilities are expected to help navigate through the current challenging environment, supporting the case for maintaining the Buy rating despite near-term volatility.

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