L&T Shares Jump 15% On Q4 Earnings: Five Things To Know

Larsen & Toubro shares jumped nearly 15 per cent on Thursday, following the engineering and construction major's March quarter earnings announcement. L&T was the top Nifty50 gainer today.

Here are the reasons why L&T rallied sharply today:

1) L&T's Q4 net profit of Rs 2,454 crore was ahead of Street estimates. The company's revenue of Rs 33,157 crore was also better-than-expected.

2) After many quarters of subdued growth, L&T expects faster growth in the current fiscal year. "We are seeing a little better prospect than last year," said group executive chairman AM Naik.

3) L&T's order book is seen rising by 15 per cent in FY17 as compared to just 7 per cent growth in new orders during FY16. Its revenue is expected to rise by 12-15 per cent in FY17 as compared to 12 per cent during FY16, the company said.

4) One big reason for L&T's underperformance was the slump in order inflow from Middle East market, which has been hit by the slump in global crude prices. The Middle East, L&T's biggest international market, accounts for a fifth of its total order book. The company said it plans to bid for projects in Far East and Africa this year to counter the slowdown in projects from Middle East.

5) L&T's Q4 numbers got a thumbs-up from big brokerages. Citi upgraded L&T to "buy" (target Rs 1,640) saying Q4 result is a turning point for execution. Jefferies also upgraded L&T to "buy" (target Rs 1,750) citing attractive valuations. Morgan Stanley raised its target on L&T to Rs 1,596 from Rs 1,416, saying the company saw broad-based strength across all segments.

G Chokkalingam, founder at Equinomics Research & Advisory said the worst seems to be behind L&T and the company may recover over the next 2-3 quarters.

"L&T gets 1/4 of its revenue from oil regions and the recovery in oil prices should help... the thrust on infrastructure in the country should help L&T," he told NDTV Profit.

Mr Chokkalingam advised investors to buy L&T on dips.

L&T shares closed 14.13 per cent higher at Rs 1,474.15 as compared to 1.70 per cent gain in the broader Nifty.