Shares of Larsen & Toubro pared early gains on Wednesday after the company posted robust quarterly results. L&T shares rose nearly one per cent to Rs 1,420 per share in the intraday trading. For Apr-Jun, the company posted a 20.5 per cent year-on-year rise in its profits to Rs 1,361 crore on new orders. L&T bagged new orders worth Rs 38,700 crore during Apr-Jun and the international orders during the same quarter stood at Rs 9,005 crore, which constituted 23 per cent of the total order book.
Taking stock of L&T’s Apr-Jun earnings, Prabhudas Lilladher has maintained Accumulate on L&T stock. The brokerage firm has reduced its revenue estimates by 2.6 per cent and 3.4 per cent in FY20E and FY21E to factor in the weakness of communication, Hi-Tech and lower guidance. It has revised its earning per share or EPS downwards by 2.5 per cent and 3.1 per cent.
“We believe the volatility in management commentary can weigh on the premium multiples. We believe the conversion of deal pipeline especially in Hi-tech will be keenly watched. We expect USD revenue & EPS CAGR of 13% & 9% from FY19-FY21E respectively. We value at LTTS at 20X FY21E earnings to arrive at a change target price of Rs.1693(Earlier: Rs.1835). The stock currently trades at 20.6X/18.9X FY20/21E EPS of Rs. 77 & Rs.85. Maintain Accumulate,” Prabhudas Lilladher said in a report.
Meanwhile, CLSA has maintained BUY on L&T stocks saying the company’s inflows are a surprise considering the tough macros. The Apr-Jun results were mixed bag. While the company surprised on new orders, execution slowed. The brokerage house noted that L&T has a credible strategy to improve growth and return on equity.
Morgan Stanley has maintained overweight on L&T on decent Apr-Jun numbers despite the challenging quarter. It said the L&T stock is 13 per cent off in three weeks and provides a good opportunity to buy.