L&T Jumps The Most In Over Two Months As Brokerages Laud Q2 Performance

Shares of Larsen & Toubro Ltd. jumped the most in over two months as analysts remained upbeat on the company’s improved order execution in the quarter ended September.

L&T’s net profit rose for the eleventh straight quarter and surpassed even the highest analyst estimate tracked by Bloomberg. Order intake of India’s largest construction and engineering company rose 46 percent year-on-year to Rs 41,921 crore. Global orders made up 20 percent of the total inflow of Rs 8,268 crore, according to its exchange filing.

The execution pickup without sacrificing balance sheet was commendable, according to brokerages CLSA. Macquarie agreed adding the margin and order inflows have the potential to surprise positively going forward.

L&T also retained its forecast of 12-15 percent growth in revenue and 10-12 percent rise in order inflows in the ongoing financial year.

The stock, set for its longest winning streak in nearly three months, rose as much as 6.7 percent to Rs 1,384 apiece.

Here’s what brokerages had to say after L&T’s September quarter results:

CLSA

• Maintains ‘Buy’ with a price target of Rs 1,730, a potential upside of 33 percent from the last regular trade.
• The September quarter was stellar, surpassing all estimates.
• Hydrocarbon remains the company’s star business; return on equity crosses 15 percent after six years.

Investec

• Maintains ‘Buy’ and raised price target to Rs 1,725 from Rs 1,620—a potential upside of 33 percent from the last regular trade.
• Stellar quarter; all estimates met.
• Improved execution environment; large order pipeline.
• Guidance likely to be met on all fronts.

Macquarie

• Maintains ‘Outperform’ and raised price target to Rs 1,880 from Rs 1,825, a potential upside of 45 percent from the last regular trade.
• L&T delivered a spotless set of numbers; handsome beat on all fronts.
• Revenue growth shifted to next gear, led by better infrastructure order execution.

JPMorgan

• Maintains ‘Overweight’ with a price target of Rs 1,570, a potential upside of 21 percent from the last regular trade.
• Large top line beat led by strong execution in flagship Infra segment and core business.
• Working capital didn’t deteriorate, despite strong pick-up in execution.
• After the first half of the current financial year, we see upside risks to estimates.

Jefferies

• Maintains ‘Buy’ with a price target of Rs 1,925, a potential upside of 48.4 percent from the last regular trade.
• The September quarter surpassed estimates in all front.
• Maintaining price target reflects those few times when risk to reward ratio is favourable, with downside protection from execution ramp up and upside from capex recovery.
• The management sounds confident of combating the tough liquidity environment, given the strong and diversified business model.