Larsen & Toubro Ltd. share price target

L&T; Q3 PAT rises 5% YoY to Rs 2467 cr, in line with estimates Total income decline by 1.18% year-on-year to Rs 35596.42 crore in Q3 December 2020. Profit before tax (PBT) rose 14.18% year-on-year to Rs 3,680.50 crore in Q3 December 2020. Total tax expense for the quarter jumped 46.37% to Rs 1,040.75 crore as against Rs 711 crore in Q3...

L&T; has a strong project pipeline for the upcoming quarter with strong domestic ordering activity seen in Infra and Hydrocarbon. Also, it stands to benefit from government support for key sectors, such as Infrastructure. We reiterate our BUY rating on the stock with a rolled...

Improvement in Revenues with labor availability improving execution Consolidated sales came in at ~`356bn (-2% YoY) mainly driven by growth across segments like Power (+29% YoY), IT&TS; (+7% YoY) and Hydrocarbon (~+1% YoY).Heavy engg (flat YoY), Infra (-7% YoY) and Development Projects (-34% YoY) were the draggers. EBITDA grew by 4% YoY to `42.8bn with EBITDA margins expanding by 66bps YoY to 12% led by better topline & operational performance. PBT was up by 14% YoY to `36.8bn. During the quarter,...

Strong order inflows led by mega orders in infra segment For Q3FY21, L&T; registered strong order inflows at the group level worth | 73233 crore, with strong growth 76% YoY, led by mega EPC orders won in infrastructure segment (~62% of inflows) including high speed rail (HSR), special bridge project, rural water supply scheme (MP), international order in power T&D; etc. While international orders for Q3FY21 came in at | 10253 crore contributing 14% to order inflows. L&T;'s order backlog at record high...

L&T;'s consolidated adjusted. PAT grew 5% YoY to INR22.6b, 42% above our expectation. The surprise was largely driven by bulky sales of commercial real estate (INR3.4b profit) and higher other income (+127% YoY). Excluding the impact of the same, core E&C; operating performance was a tad soft as core EBITDA declined 2% YoY and was 6% below our estimate. Order inflows remained robust with 76% YoY growth during 3QFY21, thanks to large orders like the High Speed Rail. With this, L&T; has largely made up for weak order inflows in 1HFY21. Considering the latest announced orders,...

NWC remains flat at 26.2% QoQ of sales aided by lower denominator. Cash collection picked up with rising payments both from Centre and States. L&T; reported healthy set of numbers led by pick-up in execution in its core infra segment, owing to improved work force availability and supply chain issues normalizing. During 3Q, company recorded highest ever OI of Rs732bn, up 76% YoY led by large order wins in Infra and Hydrocarbon segment in the domestic market. OB stands strong at Rs3.3trn providing a...

We remain optimistic and see sector rerating at a 4-5x book-to-bill and ~ 7.1/5.5x core EPC P/E for FY22/23E. Pandemics can be game changers and we are seeing that play out for the Industrials sector. There have been many first times during this cycle: (1) broad-based ordering from roads, water, refineries, metro, mega projects like high speed rail, buildings, etc; (2) average order size increasing with L&T; gaining market share in the absence of formidable competition; (3) diversified plays outperforming roads pure plays in order wins; (4) roads players accelerating diversification; (5) competitors joining hands to qualify for large ticket size projects. Given our thought leadership in the sector, we believe there may be a few mid to long term triggers for sector: (1) earnings upgrades of 30-40% coming in from 4QFY21; (2) with asset monetization - HAM P/BV to be seen as cash; (3) all-round increase in ordering both at Central/State level, given development push.

Large ticket size order wins leads to order inflow assumption upgrade: With new order announcements worth ~INR660b (at the midpoint range of the new ticket size classification) after the 2QFY21 result, YTD order inflow in the core business now stands ~INR970b, or ~84% of our last published full-year core E&C; order inflow assumption. This is largely helped by large ticket size orders, including two packages of High Speed Rail and two packages of Barmer refinery project, along with chunky orders in Water, Rail, and Road sector. As we enter peak awarding season in the coming months, we expect flattish...

Decent order inflows led by infrastructure & services segment For Q2FY21, L&T; registered reasonable order inflows at the group level worth | 28039 crore, which de-grew 42% YoY, on account of deferral of award decisions largely caused by pandemic. International orders for Q2FY21 came in at | 10200 crore, contributing 36% to order inflows. Overall infrastructure segment secured orders worth | 14522 crore (~52% of total inflows), which included international orders in water effluent and power T&D; segment, domestic orders for rural water supply, etc. L&T;'s order...

To focus on profitable execution of its large Order Book, below estimates Larsen & Toubro the engineering construction to software major has registered 12% fall in consolidated revenue to Rs 31034.74 crore for the quarter ended Sep 2020 hit by lingering impact of COVID pandemic even though the execution pick up momentum with labour at various project sites reaching near pre covid levels. Lower sales together with 70 bps contraction in operating profit margin to 10.7%, the operating profit was down by 17% to Rs 3334.75 crore. But with other income stand lower by 6% to RS 559.03 crore, the fall at PBIDT was 16% to Rs 3893.78 crore. But with interest and depreciation stand higher, the PBT was...