L&T’s Construction Arm Wins ‘Mega’ Order
Shares of Larsen & Toubro Ltd. snapped a three-day gaining streak, even as the nation’s largest construction and engineering company secured another “mega order” for the bullet train project.
The transportation infrastructure business of L&T Construction has secured another mega contract from the National High-Speed Rail Corp. to construct 87.569 km of the Mumbai-Ahmedabad High Speed Rail project, according to an exchange filing. L&T defines 'mega' orders as those valued more than Rs 7,000 crore.
The scope of this 'C6 package' includes construction of viaducts, one station, major river bridges, maintenance depots and other auxiliary works. The order represents 17.2% of the total length, the company said.
"The bullet train project is the first sure sign of our economy kick-starting again and another opportunity to drive the Make In India and Atmanirbhar Bharat Abhiyan," SN Subrahmanyan, managing director and chief executive officer at L&T, was quoted as saying in the filing.
The company had earlier won a C4 package of the same project, termed as the biggest engineering, procurement, and construction contract awarded in India to date.
"Domestic order flow [for L&T] is 97% and augurs well for future margin outlook," Jefferies India analyst Lavina Quadros said in a note. "Order flow pipeline was up 15% at end of Q2, after being down 26% year-on-year at the end of Q1. This indicates a favourable outlook for Q4 as well," Jefferies said as it maintained a 'buy' rating on the stock with a price target of Rs 1,270 apiece.
Of the 41 analysts tracking L&T, 38 have a 'buy' rating, two suggest a 'hold' and one has a 'sell' recommendation. The Bloomberg consensus 12-month target price implies an upside of 3%.
Shares of L&T ended 1.2% lower at Rs 1,134.25, as investors booked profits at higher levels, in-line with the sell-off in the benchmark indices.