L&T hits new high on winning significant orders; stock up 11% in 6 days

The company's construction arm has secured significant orders (ranging between Rs 1,000 to Rs 2,500 crore) for its businesses in India.

Shares of Larsen & Toubro (L&T) hit a new high of Rs 1,964, up 2 per cent on the BSE in intra-day trade on Tuesday after the company’s construction arm secured significant orders (ranging between Rs 1,000 to Rs 2,500 crore) for its businesses in India.

The stock of construction & engineering major was quoting higher for the sixth straight trading day and rallied 11 per cent during the same period. At 02:54 pm; L&T was trading a per cent higher at Rs 1,944, as compared to 0.46 per cent decline in the S&P BSE Sensex.

L&T Construction was awarded a significant contract for its various businesses including an EPC order for 12 MTPA Dry Circuit Systems on a turnkey basis for screening plant from NMDC and a prestigious order from DRDO to construct thier Flight Control System Facility at ADE, Bengaluru.

“Overall, L&T has won orders worth Rs 68,700 crore for H1FY22. Further, continued momentum to win large/mega complex orders/ projects to substantially improve L&T's order intake for FY22E despite challenging environment. This will further strengthen its order book and enhance its revenue visibility in medium term. We expect standalone revenue, EBITDA CAGR of 12.1%, 12 per cent over FY21-23E”, ICICI Securities said in a note.

In Q2FY22, L&T’s Hydrocarbon segment reported record-high order inflows (2-year high) at Rs 14,500 crore, on the back of a high-value order won in the international market. Peak crude oil prices (~$83/bbl in October, 2021 - up 2x yoy) is creating fresh investment capacity in certain economies, leading to high ordering prospects for H2FY22 as well (Rs 1.2 trillion; 80 per cent international). High onshore activity in the business drove 20 per cent yoy revenue growth as well, with stable margins, analysts at Emkay Global Financial Services said in result update. The brokerage firm maintains ‘buy’ rating on the stock with target price of Rs 2,200 per share.