Margin worries to persist for L&T over inflation, supply chain concerns

While target prices indicate healthy upside, the stock has been an underperformer

Although engineering major Larsen & Toubro (L&T) missed street estimates, it did deliver growth. The guidance seems achievable and despite forward estimates and valuations being pared, most analysts have maintained buy recommendations on the stock.

Margins have been hit and there are concerns about the inflationary environment and about supply chain issues. However, order inflows have remained healthy and the company looks capable of maintaining double-digit growth and free cash flow generation. It is also looking to invest in new technology assets.

On a year-on-year (YoY) basis, the company reported a 10 per cent growth in revenues, coupled to 2