Shares of Larsen and Toubro (L&T) opened over a percent higher in Wednesday's (November 1) trade after the engineering conglomerate reported a healthy set of quarterly performance with topline and bottom line rising 19% and 45%, respectively. After rising 2% in early trade, the counter gave up all its gains to trade lower. As of 10:08 am, the shares were trading lower by 1.55% at ₹2,883.75 on the NSE.
Following the quarterly results, analysts at most brokerage houses remain largely positive on the long-term prospects of the company. Brokerage firm InCred retained an 'Add' rating on the counter while Jefferies took a 'Buy' view. Among the domestic brokerages, Prabhudas Lilladher and Antique Stock Broking recommended 'Buy' while Yes Securities downgraded to 'Neutral'.
"L&T's long-term business prospects remain promising given infrastructure development and GATI Shakti being the central government's pivotal theme to revive the Indian economy. And since L&T is the largest infrastructure company in India, we believe it would be a key beneficiary," said Antique Stock Broking in a note.
Amit Anwani of Prabhudas Lilladher believes L&T is well-placed to benefit in the long run with strong tender prospects, better order conversion in the domestic market, significant traction in hydrocarbon and renewable energy orders from international markets like Saudi Arabia and an expected uptick in private capex in the domestic market.
Analysts at Yes Securities remain positive on the company’s strong business model, robust bid pipeline, diversified order book and healthy balance sheet. However, they have downgraded the stock to 'Neutral' given a significant run-up in the stock price, 23% over the last six months. The brokerage has a target of ₹2,938 on the stock.
Global brokerage Jefferies, meanwhile, has raised the target price on the L&T stock to ₹3,400 per share, implying a potential upside of 16% from Tuesday's closing levels. It said that the order flow was strong at 72% year-on-year growth.
According to Jefferies, the management said that the company should do better than FY24 order flow and revenue guidance, but the margin was revised to 8.5-9% from 9% earlier.
InCred has also upped its target on the stock to ₹3,300 per share on a profit beat. The management gave guidance of a strong order pipeline of approximately ₹8.8 lakh crore. The order pipeline saw a growth of 39% YoY, mainly led by a sharp improvement in the hydrocarbons business.
Analysts at CLSA believe L&T's strong business prospects will led by the GCC (Gulf Cooperation Council) capex and entry into semiconductors. The brokerage said that a spike in the order inflow and capital return will take L&T's return on equity to over 15%.
Citi analysts, meanwhile, believe that Larsen and Toubro may face some headwinds in the near term. The brokerage has a 'Buy' rating on the counter, with a target price of ₹3,550.
First Published: Nov 1, 2023 10:27 AM IST
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