Shares of engineering and construction giant Larsen and Toubro (L&T) increased by 2% on Thursday, reaching a high of Rs 3589.80 on the BSE. This rise came after the company reported a consolidated net profit of Rs 2,786 crore for the quarter ending June 30, 2024.
L&T’s revenue from operations saw a 15% year-on-year (YoY) increase to Rs 55,120 crore, driven by strong performance in the projects and manufacturing sectors thanks to a large order book.
In the first quarter, the company secured orders worth Rs 70,936 crore, marking an 8% YoY growth. This growth was supported by significant orders from the Middle East.
Orders during the quarter came from various segments, including the offshore hydrocarbon business, renewables, transmission and distribution, roads, nuclear power, hydroelectric projects, metals, health, and precision engineering.
Here’s what analysts from different brokerages have to say about L&T’s results:
Citi: Buy | Target Price: Rs 4,396
Citi has maintained a buy rating on L&T with a target price of Rs 4,396. They consider L&T their top pick, noting that the company’s first-quarter results met their expectations. Citi highlights the company’s decent order flow and continued focus on profitable execution and improved return ratios. They believe L&T is well-positioned to benefit from capital expenditure growth in India and the Middle East.
Nuvama: Hold | Target Price: Rs 4,040
Nuvama has kept its hold rating on L&T with a target price of Rs 4,040. They point out some challenges L&T faces, such as a large order book, a high mix of fixed-price contracts vulnerable to commodity risk, and execution/margin challenges. Nuvama notes that L&T slightly exceeded street expectations for EBITDA and PAT by 1% and 6%, respectively. Core revenue grew 18% YoY, while operating profit margins improved slightly to 7.6%. Core order inflow grew 8% YoY to Rs 54,400 crore, raising the backlog to Rs 4.9 lakh crore.
JM Financial: Buy | Target Price: Rs 3,890
JM Financial has maintained a buy rating on L&T with a target price of Rs 3,890. They mention that L&T’s first-quarter PAT of Rs 2,790 crore was below their estimate of Rs 2,900 crore due to lower other income and higher depreciation. However, consolidated order inflows grew by 8% YoY to Rs 70,900 crore, with an order backlog of Rs 4.9 lakh crore.
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