Brokerages expect potential upside of anywhere between 8-21 percent on Larsen & Toubro.
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Multiple brokerages expect further upside on Larsen & Toubro Ltd. after the company managed to beat street expectations on most parameters in the September quarter.
The engineering and infrastructure conglomerate reported a 23 percent year-on-year growth in order inflow for the quarter. Its order book of Rs 3.72 lakh crore was the highest ever reported.
L&T's management told CNBC-TV18 during its earnings call that the order inflow growth this year is likely to be towards the upper band of its 12-15 percent guidance.
The management also mentioned on the call that it will look to completely exit road assets, the agreement for which may be signed this quarter. The agreement will be subject to regulatory approvals.
Most brokerages also believe that the company is on track to meet its order inflow guidance for the year and have raised their future earnings estimates. Here's what they had to say:
|Brokerage||Rating||Old Price Target (Rs.)||New Price Target (Rs.)||Potential Upside (%)|
While raising its price target on L&T, JPMorgan said that it is confident of the company achieving its margin guidance despite the skepticism around the same.
Credit Suisse says that strong traction on domestic execution and order inflows bode well for the company. It highlighted four key factors for its bullish stance - cyclical benefits, progress on divestment of non-core assets, risk reduction in projects like the Hyderabad metro based on traffic and settlement, and valuations still being reasonable.
CLSA says that L&T's execution is picking up well, although the margin picture still remains weak. The brokerage expects margin visibility to improve from ongoing quarter due to the correction in commodity prices.
Morgan Stanley raised L&T's Earnings Per Share (EPS) estimate between the current and financial year 2025 by 1-8 percent on strong execution momentum. It believes that investors are looking for growth in the core business and lower working capital.
Jefferies, which is the most bullish among analysts covered in this piece, expects L&T to benefit from execution and margin recovery as supply disruptions and commodity prices continue to ease.
Shares of Larsen & Toubro ended at a 52-week high on Monday at Rs 2,031.
First Published: IST