L&T Shares Rise Most In Four Months As Analysts Remain Bullish After Q3 Results

That L&T retained its revenue growth guidance for FY20, despite lacklustre operating profit, seems to have worked in its favour.

Darshan Mehta @darshanvmehta1

23 Jan 2020, 09:49 AM IST

Traffic passes a construction site for by Larsen & Toubro Ltd. in Lucknow, Uttar Pradesh, India (Photographer: Prashanth Vishwanathan/Bloomberg)

Shares of Larsen & Toubro Ltd. gained the most since Sep. 23, 2019 as most analysts maintained their stance on the stock after the company’s December quarter results.

L&T’s third-quarter operating profit missed estimates as order execution remained muted amid state elections and a slowing economy. Still, the infrastrucutre major maintained the order inflow guidance at 10-12 percent for the year and revenue growth guidance at 12-15 percent.

Here is what brokerages have to say on L&T’s Q3 results:

Emkay

Maintain ‘Buy’; Hike target price to Rs 1,575 from Rs 1,559.
Q3 results reflect concern on near-term slowdown from slowing government spending.
Order book growth in infra segment was positive, though sustenance in FY21 is the key.
L&T remains well-placed to benefit from the continued infra spends in India.

Edelweiss

Maintain ‘Buy’ with target price of Rs 1,950.
Short-term disruptions mar performance; sanguine prospects.
Focus on cost, cash and diversification paying off.
Maintain L&T as industrials top idea despite the Q3 earnings miss.

Nomura

Maintain ‘Buy’ with target price of Rs 1,715.
Third-quarter core revenue weakens on execution headwinds.
Order inflows remain robust; stable working capital levels lead to strong cash generation.
Improvement in core Ebitda margin a key positive.

Morgan Stanley

Maintain ‘Overweight’; Cut target price to Rs 1,556 from Rs 1,753.
Q3 was below expectations but expect a stronger Q4.
Execution and liquidity-related challenges in some states affected revenue growth.
Execution challenges are receding, cash flows should seasonally improve in Q4.
Domestic prospect list is strong and E&A deal is likely to close shortly.

UBS

Maintain ‘Buy’ with target price of Rs 1,600.
Q3 performance reflective of resilience of the business model.
Despite Q3 print, management maintained revenue and order inflow guidance.
Domestic awarding outlook reasonable in the light of L&T's ask.