Larsen & Toubro (L&T), a prominent player in civil construction, has been witnessing significant upward momentum in its shares throughout this week. The stock has consistently reached record highs, marking a gain of up to 5 percent. On September 29, L&T shares surged to an all-time high of Rs 3,057 per share on the BSE, reflecting a 1.5 percent increase.
As of Friday, approximately 11 lakh shares have been traded on both exchanges, compared to the 42 lakh shares traded on September 28. Over the past week, the stock has seen an average trading volume of around 23 lakh shares.
In an official statement released on September 29, L&T announced that its construction division had secured a substantial order from the Mumbai Metropolitan Region Development Authority (MMRDA). This order pertains to the design and construction of an Underground Road tunnel Project connecting Orange Gate on the Eastern Free Way to the Marine Drive Coastal Road in Mumbai.
The management stated, “The project alignment will run primarily under the Sardar Vallabhbhai Patel Road and is to be completed within 54 months.”
Additionally, on September 28, L&T successfully concluded the bids for its Rs 10,000 crore share buyback program, achieving a 100 percent retail acceptance ratio. The maximum price was set at Rs 3,200 per share.
Leading global brokerage firm Jefferies has upheld its ‘buy’ rating on L&T, emphasizing the company’s robust order flow in key regions like India and the Middle East. Jefferies anticipates significant order flow in the first half of fiscal year 2024 (H1FY24) driven by elections, with margin recovery expected in the second half (H2). L&T is currently trading at a price-to-earnings (PE) ratio of 26x FY25E PE, representing a 23 percent discount compared to the FY03-10 average PE during the previous capex upcycle.
UBS is equally bullish on L&T and has raised its target price to Rs 3,600 per share. Analysts foresee L&T achieving a compounded annual growth rate (CAGR) of 17 percent in core sales and 32 percent in earnings per share (EPS) from fiscal year 2023 to 2026. The company’s new strategic direction ensures a consistent influx of new orders and expands opportunities in international markets. Approximately 25 percent of L&T’s order book in the June quarter originated from the Middle East.
In addition to Jefferies and UBS, other analysts have also shared optimistic outlooks for L&T. Prabhudas Lilladher set a target price of Rs 3,302 per share, CLSA established a target price of Rs 3,240 per share, and Bernstein proposed a target price of Rs 3,268 per share for L&T.
Investors and market observers are closely monitoring L&T’s impressive performance, underpinned by a robust order book and the company’s strategic initiatives for future growth.