Brokerages Raise Price Targets For L&T After Q1 Results
Here are the key brokerage takeaways:
Brokerages raised price targets for Larsen & Toubro Ltd. even as net profit of the nation’s largest engineering-to-construction company fell and order inflows were less than expected in the first quarter of the ongoing fiscal.
L&T’s net profit slumped by 50.4% sequentially, while revenue dropped 39% in the quarter ended June. Its margin, too, contracted over the previous three months.
For the quarter ended June, the company received fresh orders worth Rs 26,557 crore, lower than a quarter ago. Consolidated order book stood at Rs 3,23,721 crore, with international orders comprising 20% of the order book.
Shares of L&T were trading 0.55% higher at Rs 1,606 apiece as of 10:30 a.m. on Tuesday. Of the 42 analysts tracking the company, 40 have a ‘buy’ rating, and one each recommend a ‘hold’ and a ‘sell’, according to Bloomberg data. The 12-month consensus price target is at Rs 1,807.
Here are the key brokerage takeaways:
Nomura:
Maintains ‘buy’ rating; raises target price to Rs 1,870 from Rs 1,654 apiece.
Guidance of low-to-mid-teen revenue growth in FY22F appears reasonable.
Order inflow guidance seems ambitious.
Expects commodity prices to impact core Ebitda by 210 basis points in FY22F.
Potential asset sales and resolution of Hyderabad Metro financing could be longer-term triggers.
Jefferies
Maintains ‘buy’, hikes target price to Rs 1,900 from Rs 1,800 apiece.
L&T Ebitda 12% below expectations.
Pandemic-induced delays, including fatalities and local lockdowns, impacted execution.
Order flow was up 13% YoY (FY22E guidance 13%-17%).
Investec Securities
Maintains ‘buy’; increases target price to Rs 1,970 from Rs 1,785 apiece.
Q1 FY22 Ebitda in line with estimates, despite weakness in finance business.
Core Ebitda ahead of estimates, led by better-than-expected margin across most segments.
Order inflows (up 13% YoY, down 31% vs Q1 FY20) were weaker than expectations.
Order pipeline remains robust, with the rise in crude prices, improving hydrocarbons prospects.
Sees L&T as a beneficiary of continued strength in government capex.
Motilal Oswal Securities
Maintains ‘buy’; hikes target price to Rs 1,835 from Rs 1,700 apiece.
L&T’s adjusted PAT missed estimates by 19% (owing to higher tax rate and lower other income).
Core E&C order inflows were up just 11% despite the weak base of last year — a key negative.
Increases target price to Rs 1,835, driven by mark-to-market of the current market price of the listed subsidiaries.