L&T share price drops 6% post Q4 results; Should you Buy, Sell or Hold the stock?
- Stock Market Today: Larsen & Toubro (L&T) share price declined 6% in the intraday trades on Thursday post Q4 Results that were reported after the market hours on Wednesday. The stock was largest loser amongst Nifty-50 stocks and ended the day 5.65 lower. Should you Buy, Sell or Hold the stock?
Stock Market Today: Larsen & Toubro (L&T) share price remained in focus on Thursday post Q4 Results that were reported by L&T after the market hours on Wednesday. The Larsen & Toubro (L&T) share price slipped more than 6% during the intraday trades on Thursday Larsen & Toubro (L&T) share price was largest loser among the Nifty-50 stocks too and it ended the day 5.65% lower on the NSE
Larsen & Toubro (L&T) reported an 10.3% increase in net profit of to ₹4,396 crore from ₹3,987 crore in the same period the previous year.
In comparison to the revenues of ₹58,335 crore recorded in the same period last year, the multinational infrastructure conglomerate's revenue from operations increased by 15% to ₹67,078.7 crore in Q4FY24.
The focus remained on order in flows as well as revenue and margin guidance by Larsen & Toubro (L&T).
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Strong order book
As of March 31, 2024, the group's consolidated order book stood at ₹475,809 crore, representing a 20% increase from the previous year. Of these orders, 38% came from the international arena. During FY24, the company's group level orders totaled ₹302,812 crore, representing a 31% increase.
The order inflow for the quarter that concluded on March 31, 2024, was ₹72,150 crore, representing a slight decline of 5% from the same period the year prior. Compared to the same quarter of last year, domestic order inflow increased by 17%. With ₹25,217 crore, the international orders made up 35% of the total.
Analysts at Jefferies India Pvt Ltd in their post results report said that 10% year-on-year FY25 guidance is lower than the normal 12-15% YoY broad expectation, but this is on the higher base of 31% YoY growth seen in FY24. Prospect pipeline is up 24% YoY and gives upside surprise scope potential for management’s 10% YoY FY25 order flow growth guidance, added Jefferies.
FY25 margin guidance remains flattish
Looking at the low margin legacy orders that are to be executed in first half FY24, the expectations of significant margin improvement remained subdued. Analysts at Motilal Oswal Financial Services further said that the company has reduced its future margin guidance to 8.2-8.3% for FY25 to bake in supply chain disruptions, an uncertain political environment, and ongoing conflicts as the reduced margin guidance takes into account low margins in its key infrastructure segment across several areas. The Ebitda margins reported by the L&T as per analyst calculations stood at 10.6% in FY24 which were lower than 11.1% in FY23.
Analysts at Jefferies India Pvt Ltd said that the revenue guidance is 15% YoY, which looks low given the FY24 orders
Analysts Views and recommendations
Motilal Oswal Financial Services has revised its target price to ₹4,000 based on an Sum -of- the-parts methodology, valuing the core business at a Price to Earnings ratio of 30 times March’26 EPS (earnings per share) and taking in to consideration 25% holding company discount for subsidiaries. They reiterate their BUY rating on L&T.
“Our multiple takes into account the continuously improving prospect pipeline and improvements in NWC and RoE (Return on Equity), despite margins being lower than guidance” said analysts at MOFSL
Jefferies India Pvt Ltd have a Buy rating on L&T with a target price of ₹3,970 which is slightly lower than ₹4,135 seen earlier). Their revised price target factors the revised numbers and rollover from FY26 to September 26. However analysts said that Visibility with conservative guidance should drive stock. Both of L&T’s key geographies, India and Middle East are seeing capex traction.
Antique Stock Broking remains positive on the long-term prospects of the Larsen & Toubro (L&T) and maintain Buy rating on the stock with a revised SOTP ( Sum of the parts) target of ₹ 3,933 (slightly lower than ₹4,223 earlier). Analysts aid that L&T’s long-term business prospects remain promising given infrastructure development and GATI Shakti being the central government’s pivotal theme to revive the Indian economy.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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