L&T Shares Tank As Q3-Print Misses Estimates, But Several Analysts Still Bullish

L&T‘s share price continued to trade in the red on Wednesday as the company’s December-quarter results missed consensus estimates.

What Happened: Larsen & Toubro (L&T) reported a consolidated net profit of ₹2,947 crore for the December quarter, marking a 15% increase from the year-ago period. This growth was attributed to improved execution of infrastructure projects and continued expansion in the IT and tech services portfolio.

The company’s revenue surged to ₹55,128 crore, marking a 19% increase from the previous year. EBITDA for the quarter stood at ₹5,760 with an EBITDA margin of 10.4%.

During the October-December period, L&T secured orders worth ₹75,990 crore at the group level, demonstrating a robust 25.2% growth compared to the corresponding quarter of the previous year when it had won orders worth Rs 60,710 crore.

Looking ahead, L&T anticipates a temporary slowdown in public capital expenditure due to the upcoming general elections in 2024. Additionally, the company noted the ongoing volatility in the global economy, with continuing military engagements in Europe and West Asia disrupting supply chains and global trade movements.

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However, L&T remains optimistic about the growth prospects in West Asian countries, particularly Saudi Arabia, which is expected to continue pursuing ambitious growth plans in both energy and other sectors.

Analyst Reactions: Citi maintained its “buy” rating for the stock with a price target of ₹4,082. The brokerage said that the company reported good order inflows and execution but margins were muted. The analysts added that margins are expected to improve in the medium term.

Motilal Oswal also maintained its “buy” call on the stock with a target price of ₹4,200. The domestic brokerage said that the infra giants’ revenue beat its estimates but lower margins led to a miss on net profit estimates.

Incred maintained its “Add” rating for the stock with a price target of ₹4,016. The brokerage said that the company’s EBITDA and PAT were both below expectations. The analysts also pointed out that the company’s management has revised order inflow growth guidance to 20% from 15% for the year ending March 2024.

Kotak Securities downgraded the stock’s rating to “sell” from “reduce” with a price target of ₹3,633. The brokerage said that the company reported a weak quarter and ramp-up in new projects was slow.

Price Action: L&T’s share price was down 4.07% to trade at ₹3,487.05 as the markets opened on Wednesday.

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