L&T surges 5% to hit fresh high; surpasses its buyback price of Rs 3,200

In the past month, the stock price of L&T has outperformed the market by surging 15 per cent as compared to a nearly 6 per cent rise in the S&P BSE Sensex

Shares of Larsen & Toubro (L&T) surged 5 per cent to hit a new high of Rs 3,347.25 on the BSE in Monday’s intra-day trade amid heavy volumes led by a strong business outlook.

The stock of engineering, procurement and construction (EPC) major topped its share buyback price of Rs 3,200 per share today.

L&T had bought back 31.25 million equity shares of the company via tender offer, which opened on September 18, 2023 and closed on September 25, 2023.

In the past one month, the stock price of L&T has outperformed the market by surging 15 per cent as compared to a nearly 6 per cent rise in the S&P BSE Sensex.

Thus far in the calendar year 2023, L&T has zoomed 60 per cent, as against 12.3 per cent surged in the benchmark index.

L&T is one of Asia’s largest vertically integrated EPC conglomerates, with a strong market position across segments such as infrastructure, power, hydrocarbons, heavy engineering, defense engineering, electrical and automation, IT, information technology and technology services (IT&TS), metallurgical and material handling, and machinery and industrial products.

L&T undertakes infrastructure development projects (roads, metro rail, power and transmission lines) through its SPVs:  L&T Power Development and L&T Metro Rail (Hyderabad).

L&T delivered a remarkable earnings performance in the July to September quarter (Q2FY24), with substantial revenue and order growth across segments.

The management is confident of surpassing the earlier guidance of revenue (12-15 per cent) and order inflow (10-12 per cent) growth thanks to the exceptional execution of projects in H1FY24 and higher order inflow prospects.

Hence, analysts at Geojit Financial Services remain optimistic about the company's outlook and reiterated their 'buy' rating on the stock with a revised target price of Rs 3,348 based on SOTP valuation.

Meanwhile, CRISIL Ratings believes L&T will maintain its leadership position in the EPC segment in India and is positioned to benefit from the infrastructure spending in India over the medium term. Its profitability is expected to be stable, supported by the increasing contribution of the IT business.

Whilst prospects pipeline and H1FY24 performance warranted guidance upgrade, given uncertain geopolitical issues and the upcoming Indian election, L&T has kept guidance open-ended with a positive bias of surpassing the same, HDFC Securities said.

Given the record-high order book (OB) of Rs 4.5 trillion; bottoming out of infra margins; improvement in subsidiary performance; and higher public capex towards a green economy, the brokerage maintained its buy stance on the stock with an unchanged SOTP based target price of Rs 3,613/share (standalone P/E multiple of 26x on Sep-25E EPS).