scorecardresearchLarsen and Turbo stock rose 3.7% to hit a record high; up 16% in last 3 months

Larsen and Turbo stock rose 3.7% to hit a record high; up 16% in last 3 months

Updated: 18 Jan 2023, 08:57 AM IST
TL;DR.
L&T shares have risen more than 31.35% in the last six months, and from their 52-week low of 1,456 marked on June 20, 2022, the stock has soared nearly 52% to date. For the September-ending quarter, the company posted a 22.50% YoY jump in its consolidated net profit of 2,229 crore.
Domestic brokerage firm ICICI Securities in its equity research noted that the company has a robust deal pipeline.

Domestic brokerage firm ICICI Securities in its equity research noted that the company has a robust deal pipeline.

Following a lacklustre ending in the previous two trading sessions, shares of Larsen & Toubro began Tuesday's trading session strongly at Rs. 2,139.9 apiece and climbed further to hit an all-time high of Rs. 2,217.8 on the NSE, surpassing its previous high of Rs. 2,211. The stock finally finished the day higher at Rs. 2,213, up by 3.55%.

The strong rally in the stock came after the company on Monday said its arm, L&T Construction, had won a repeat order from a developer to build an office complex with two towers in Hyderabad with a built-up area of 57.44 lakh square feet.

The company will be responsible for the civil work on the towers, one of which will have 22 floors and the other 41 floors. The construction is scheduled to be completed in 18 months, it said.

L&T shares have risen more than 31.35% in the last six months, and from their 52-week low of 1,456 marked on June 20, 2022, the stock has soared nearly 52% to date. In the last three-month period, the stock has gained 16%, while it climbed 4.3% in a week.

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Stock price chart of Larsen & Turbo.

Domestic brokerage firm ICICI Securities in its equity research noted that the company has a robust deal pipeline.

The company witnessed an impressive 23% YoY revenue growth in H1FY23 and is currently at its highest-ever order book value of Rs.3.72 trillion, a 3.1x TTM core business.

This feat has been accomplished on the back of strong inflow growth of 36% YoY. L&T management estimated order prospects of Rs. 6.3 trillion for H2 FY23, which “we believe would enable 12–15% growth in consolidated order inflow and revenues for FY23E”, said the brokerage.

ICICI expects this momentum to last at least until the end of FY24E, up until the general elections. However, given commodity price stabilisation over a year of high volatility, private Capex spending (primarily on minerals and metals) is expected to catch up, it added.

L&T is targeting a revenue of Rs. 2.7 trillion, implying a 15% CAGR over FY22–26. "The company’s long-term strategic plan, entitled "Lakshya 2026," centres on the major themes of incubation and scale-up of new-age businesses (green hydrogen, electrolysers, data centres, and eCommerce), profitable expansion with sustainable growth in the current business portfolio, and divestment of non-core assets, which may lead to a targeted RoE of 18%," said ICICI Securities.

Given the Indian government's focus on indigenous procurement, defence opportunities over the past few years have improved for L&T. The prospective pipeline as of Q2FY23 was at Rs. 200 billion, it noted.

For the September-ending quarter, the company posted a 22.50% YoY jump in its consolidated net profit of 2,229 crore as against a net profit of 1,819.5 crore in the same quarter of the last fiscal. Sequentially, the net profit was up 18.78%.

It reported a 38.50% YoY rise in total revenue to 43,501 crore compared to 35,305 crore in the same period last year. The company's operating profit rose 4.31% YoY to 5,532.1 crore from 3,994.9 crore and it was up 18.78% compared to the preceding quarter.

Similarly, the EBITDA margin of the company increased to 12.94% YoY in Q2 FY23 from 11.49% in Q2 FY22, a growth of almost 145 basis points (bps).

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 18 Jan 2023, 08:57 AM IST