Larsen and Toubro (L&T) share price jumped over 2% in early trade, a day after company reported 45% on-year growth in consolidated net profit at Rs 1,702 crore for the first quarter of FY23. On a sequential basis, the profit declined 53%. Consolidated revenues rose 22.2% on-year to Rs 35,853 crore and met the expectations. On a sequential basis, the revenue went down 32.2%. L&T share were quoting at Rs 1,794 apiece on NSE intraday, up 2.4% from previous close. So far this year, the stock has plunged over 6%. However, analysts remain bullish and see up to 34% upside.
Should you buy, hold or sell L&T shares?
Prabhudas Lilladher: Buy
Target price: Rs 2,030
Analysts at Prabhudas Lilladher believe that L&T is well-placed to benefit from overall diversified tender prospects with better order conversion in domestic market, significant traction in capex from oil exporting countries and expected uptick in private capex. “Given companies focus on diversification of non-core assets, prudent working capital management, diversification into new business (hydrogen, green EPC), improving operational performance of Hyderabad Metro and continued execution momentum, we revised upwards our estimate by 0.7/3.9% for FY23/24, they said. The stock is currently trading at PE of 23x/20x FY23/FY24E. The brokerage maintains ‘buy’ rating on the stock with a revised target price of Rs 2,030, down from Rs 2,091 earlier, factoring in revised valuation for subsidiary businesses.
Target price: Rs 2,370
Edelweiss Securities believes that L&T’s FY23E guidance with robust pipeline coupled with a confident core margin commentary adds comfort despite global headwinds. “Return-accretive initiatives (non-core exits), core E&C growth ramp-up potential with site level cash focus abets investor confidence,” it said. Analysts at the brokerage firm stated that L&T’s pace of core operations seem slow, however, reflects the state of current infra coupled with internal return/cash focused business strategies. They see a potential for a better earnings/balance sheet profile, on the back of which they retain ‘buy’ call on the stock with a revised target price of Rs 2,370, up from earlier TP of Rs 2,274. L&T remains on of Edelweiss’ sector best picks.
Target price: Rs 2,075
L&T reported all round performance despite global headwinds, supply chain challenges and a rise in input cost in a seasonally weak quarter, according to the brokerage firm analysts. “Healthy order inflow guidance and optimistic management commentary on order prospects going forward gives us comfort. International outlook too looks buoyant as there are a host of opportunities,” they said. The brokerage maintains a ‘buy’ rating on the stock with a revised SOTP-based target price of Rs 2,075, factoring in increase in valuation multiple for the core business given robust order book of Rs 3.6 lakh crore (2.2xTTM revenue) and a promising long-term outlook.
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