Morgan Stanley Expects L&T's Greener Play To Reap Dividends, Sees 9% Upside

Morgan Stanley has taken a bullish stance on construction giant Larsen & Toubro (L&T) for its growing green credentials.

What Happened: The global brokerage issued an “overweight” rating and a target price of ₹3,857 per share, highlighting L&T’s move towards sustainability and its ambitious greenhouse gas emission reduction targets. This target price suggests a potential upside of 9% from L&T’s current market price.

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Morgan Stanley noted L&T’s goal to achieve carbon neutrality by 2040, with greenhouse gas emissions expected to peak by FY26. To meet this objective, L&T will focus on three areas: energy efficiency improvements of 35%, decarbonising energy uses by 55% and utilising offsets of 10%.

In FY24, L&T improved its greenhouse gas emissions intensity by nearly 12%, the brokerage said. The company's current carbon footprint, including scope 1 and scope 2 emissions, is primarily from diesel and electricity consumption, it added. Diesel accounts for 75% of L&T's energy use, while electricity makes up 16%.

Price Action: L&T’s share price was trading close to flat on Tuesday at around ₹3,534.80. The stock has gained a mere 0.27% so far this year, underperforming an 8.55% uptick in the Nifty 50.

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