L&T Share Price: Larsen & Toubro (L&T) shares rose in early trade on Wednesday, a day after the company declared its June quarter earnings. The scrip was trading higher by over 2 per cent at Rs 1,782 apiece on the BSE in Wednesday’s opening deals after the engineering and construction conglomerate’s consolidated net profit increased 45 per cent to Rs 1,702 crore in June 2022 quarter as compared to Rs 1,174 crore in the year-ago quarter. Engineering major’s consolidated revenue from operations increased 22.22 per cent to Rs 35,853.20 crore during the quarter. Growth was aided by improved construction activity and strong execution across projects, said R Shankar Raman, chief financial officer, L&T, during earnings call on Tuesday.
Sequentially, however, L&T’s revenue declined 32 per cent in Q1 because the April-June quarter is typically weak for infra and engineering companies on account of the monsoon season.
Its profit before interest, depreciation, and taxes (PBIDT) came in at Rs 6,108 crore for Q1, up 13.4 per cent YoY, but down 28 per cent QoQ, the results showed.
Despite challenges, the company saw strong traction in order inflows in Q1, Shankar Raman said. It secured orders worth Rs 41,805 crore during the period, up 57 per cent from the year-ago period. Orders from international customers in Q1 stood at Rs 17,842 crore.
Orders came from a diverse set of businesses, including public infrastructure, water management, minerals, metals, data centres, and hydrocarbons.
What Should Investors Do Now?
Analysts at Sharekhan said that the company reported all round performance despite global headwinds, supply chain challenges and a rise in input cost in a seasonally weak quarter. Healthy order inflow guidance and optimistic management commentary on order prospects going forward gives us comfort. “International outlook too looks buoyant as there are a host of opportunities,” Sharekhan said in a note.
We maintain a Buy rating on the stock with a revised SOTP-based price target (PT) of Rs 2,075 factoring in increase in valuation multiple for the core business given robust order book of Rs 3.6 lakh crore (2.2xTTM revenue) and a promising long-term outlook,” it added.
“Q1FY23 revenues and EBITDA was 11 per cent and 10 per cent above expectations. Order flow growth was strong at 57 per cent YoY growth, driven by both domestic and international segments. Prospect pipeline is down 15% YoY, but management maintained its 12-15 per cent YoY order flow and revenue growth guidance,” said Jefferies while maintaining a Buy rating on L&T shares with a target price of Rs 2,215.
The global brokerage believes L&T should continue to benefit from execution and margin recovery as negative impact of supply disruptions and sharp rise in commodity prices in Q4 continues to ease.
“The key positive in the quarter was order inflow (ex-services), which stood at Rs 280 bn (up 85 per cent YoY) on better inflows in Infrastructure, Hydrocarbon and Defense segments. Order prospects for the rest of the year stood at Rs 7.6 tn. While this is lower than last year, LT has been selective in bidding and hence there is an expectation of a higher conversion ratio,” said Emkay with Buy on the infra stock and 12-month target price of Rs 1,960.
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