L&T Q1 Results Review: Capex Growth In India To Benefit Company, Say Brokerages
The stock rose as much as 2.86% intraday to Rs 3,620 apiece on the NSE.
Shares of Larsen & Toubro Ltd. surged nearly 3% on Thursday as analysts remained bullish after its results for the first quarter of the current financial year, with the company being best placed to benefit from growth in capital expenditure in India.
The engineering, procurement, and construction company recorded an order-inflow growth of 8% despite the election, Bernstein Research said in a note on July 24. "Order inflow and margins in line to meet full-year guidance."
The brokerage remains positive in the medium term on the back of capex in India and the Middle East, the note said.
The engineering-to-construction is experiencing healthy-capex tailwinds in India and the Gulf Cooperation Council. On order inflows and revenue, the company is running ahead of its own strategic plan, which ends in the next financial year, Citi Research said. "Self-help is leading to decade lows in working capital and increase in RoEs (return on equities) to 15%."
Net profit of L&T increased 10% to Rs 3,440 crore in the three months ended June, surpassing analysts' estimates. The total consolidated order book rose 19% annually and 3% on a sequential basis to Rs 4.91 lakh crore.
The company faces headwinds of a large order-book base but there is limited scope for margin surprise in the near term, according to Nuvama Institutional Equities.
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L&T's stock rose as much as 2.86% during the day to Rs 3,620 apiece on the NSE. It was trading 2.73% higher at Rs 3,615.5 per share, compared to a 0.11% advance in the benchmark Nifty at 1:07 p.m.
The share price has risen 41% in the last 12 months and 2.6% on a year-to-date basis. The total traded volume so far in the day stood at two times its 30-day average. The relative strength index was at 51.
Thirty out of the 35 analysts tracking the company have a 'buy' rating on the stock, three recommend 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 9.7%.
