L&T shares decline over 3% amid profit booking post March quarter results

Shares of engineering major Larsen and Toubro (L&T) declined 3.3 per cent to Rs 1,368.5 on the BSE in Monday's intra-day deals on the back of profit booking. India’s largest engineering and construction firm on Friday reported a consolidated net profit of Rs 3,293 crore for March quarter of FY21 (Q4FY21), up 3 per cent year-on-year (YoY), on higher revenues and surge in other income.

The reported net profit was higher than Bloomberg consensus estimate of Rs 3,042 crore, despite the 116 per cent YoY jump in tax expenses to Rs 2,087 crore. However, net sales at Rs 48,088 crore and up 8.7 per cent YoY, were slightly lower than expectations of Rs 48,602 crore. Sequentially, it jumped 35 per cent. 

“The revenue gro­wth on a YoY basis was evid­encing ret­urn to pre Covid levels of activity. The international revenues at Rs 15,851 crore constituted 33 per cent of the total revenue,” L&T said in its release. 

The order inflow or new orders received during Q4 stood at Rs 50,651 crore, down 12 per cent YoY with deferment of awards. Sectors such as factories, hydel and tunnel, metros, special bridges, nuclear power, rural water, renewable energy, hydro­carbon offshore and minerals and metal sector contributed significantly to the orders during the quarter.

International orders at Rs 18,439 crore is at 36 per cent of total order inflow, with receipt of the biggest Solar PV plant order and transmission line orders, said the company.

"L&T's FY21 performance confirms the global/local trend of slower site traction for long-cycle projects and it's heartening to see stable balance sheet. Core(inflow/sales) for FY21 dropped by 11 per cent each. However, strong Rs 9.6 trillion pipeline/bottom cycle operating profit margins (OPMs) and rising private sector prospects could offer higher earnings/return delta over two-three years along with divestment upsides," wrote analysts at Edelweiss Securities in its post-result report. The brokerage has 'Buy' call on the stock with a target price of Rs 1,880. 

Going-forward, L&T expects order prospects to the tune of Rs 9.06 lakh core for FY22E, up 8.7 per cent YoY. Out of this, Rs 6.56 lakh crore is in infrastructure segment and rest in other segments. Geography wise, Rs 6.97 lakh crore order prospects in domestic markets across urban infra, transportation, water, power T&D, renewables and Rs 2.1 lakh crore in International market across hydrocarbon, power T&D in Middle East, Africa, Asean, Indonesia, Philippines, etc

Those at ICICI Direct, too, have 'Buy' call on the stock (target price: Rs 1,700) and expects L&T to deliver standalone revenue CAGR of 12 per cent, Ebitda CAGR of 11.8 per cent and PAT CAGR of 15.1 per cent in FY21-23E.

"As of now, the company has guided for low to mid teen growth in order inflows and revenue for FY22E while there could be near term challenges amid second wave of pandemic. Margins are expected to remain stable at current levels," the brokerage noted. 

At 9:50 AM, the scrip trimmed losses partially and was down 1.6 per cent at Rs 1,392 per share as against a 0.7 per cent rise in the benchmark S&P BSE Sensex.