Larsen & Toubro hits 52-week high on steady order flow in construction arm

L&T today announced that its construction arm has secured significant orders from prestigious clients for various businesses

Shares of Larsen & Toubro (L&T) hit 52-week high of Rs 1,390, up 3 per cent on the BSE on Thursday, in an otherwise subdued market riding on steady stream of order inflows in the constructions & engineering major.

L&T on Thursday announced that its construction arm has secured significant orders from prestigious clients for various businesses. The commercial and residential spaces arm of the buildings & factories business has won an order from a reputed developer to construct an office space in Mumbai. READ MORE

While, The railways strategic business unit has secured an engineering, procurement and construction (EPC) order from the Central Organisation for Railway Electrification (CORE), package EPC-06 to electrify 918.40 RKM/1171.31 Track KM of railway lines in the North Western Railway.

On Wednesday, the construction arm of L&T secured orders from prestigious clients for Metallurgical & Material Handling Business and Power Transmission & Distribution Business.

L&T did not disclose the size of the orders but stated that significant orders are in the range of Rs 1,000 crore-Rs 2,500 crore. Considering the current order win, L&T has announced EPC order wins worth more than around Rs 70,000 crore, as on date since October and is the lowest bidder in orders worth around Rs 8,800 crore.

"During October-December quarter (Q3FY21), L&T announced EPC orders are estimated to be more than Rs 59,000 crore,  across high speed rail, construction, water effluent, hydrocarbon, transportation, mining equipment, power T&D, heavy civil infrastructure and defence segments indicating robust order inflows for the quarter. Also, the order pipeline remains robust across T&D, green energy corridor, railways, transportation, water & infrastructure, etc. Key risks remain project delays/deferrals and less-than-expected conversion of the tendering pipeline," ICICI Securities said in a note.

Meanwhile, the brokerage expects Q3FY21 to be a reasonable quarter for the capital goods universe in terms of order inflows while execution may further improve sequentially as we expect execution pick-up with workers almost returning to sites reaching more than around 95 per cent of pre-Covid levels during the quarter amid normalising economic activities.

"In our view L&T's working capital and cash flow situation will be key monitorable. Consequently, we expect adjusted standalone revenue to grow marginally by 0.5 per cent to Rs 19,985 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to grow by 9.9 per cent to Rs 1608.8 crore with margins expected to improve 30 basis points (bps) to 8.0 per cent for the quarter," it said.