L&T rallied by more than 3% in the Monday morning trade, on the back of better-than-expected corporate earnings reported last week. The consolidated net profit had seen a jump of more than 50%, to Rs 1,028.3 crores. Revenue from the infrastructure segment rose 14 per cent, mainly lead by a pickup in growth in the domestic side. In the domestic infra segment, revenue grew 18 per cent due to increase in orders in transportation infrastructure. The fresh order intakes fell by 11% to Rs 26,400 crores, due to low demand from a below par investment environment in Middle East, one of the key markets for L&T.
There seems to have been a shift in management focus, to improving the balance sheet as opposed to mere profit growth. The stock has outperformed the benchmark in the year with returns just shy of 30%. The Sensex is up by 21% in year to date terms. Notably, L&T’s stock has been trading in a tight range in the past three months. The stock has shed 0.5% in this period. Due to the sheer size of the company, it’s performance is seen as a proxy for the prospects of the infrastructure sector. The Nifty Infrastructure index has returned 24% in year to date terms. With the company focusing on improving its growth and RoE, the stock is likely to remain one of the bets of long-term investors.