L&T Q1 preview: Buyback, special dividend and other things to know

Civil construction major Larsen and Toubro (L&T) is likely to clock up to 12.4 per cent year-on-year (YoY) revenue growth to Rs 40,282 crore in the April-June quarter of fiscal year 2023-24 (Q1FY24), on improved construction activity across all major projects, noted analysts. 
 

The company is scheduled to announce results on Tuesday, July 25. That apart, the management will also meet to mull share buyback and special dividend for FY24. 
 

That said, if a special dividend is approved, the record date to determine shareholders' entitlement would be August 2, 2023. Earlier, L&T had paid a special dividend of Rs 18 per share in November 2020.

Moreover, this would be L&T's second attempt at share buyback offer. Earlier, the company had proposed a buyback offer worth up to Rs 9,000 crore in 2019, which market regulator Sebi prohibited on compliance issues.
 

That apart, brokerages estimate earnings before interest, tax, depreciation, and amortisation (Ebitda) margins to expand up to 29 basis points (bps) YoY to 11.3 per cent in Q1FY24. However, margins are expected to contract up to 38 bps quarter-on-quarter (QoQ) from 11.7 per cent in Q4FY23, analysts added.
 

Adjusted profit-after-tax (PAT), meanwhile, is likely to grow 25 per cent YoY to Rs 2,127 crore in the June quarter.
 

So far in this calendar year (CY23), shares of L&T surged 24 per cent, as against 9.1 per cent gain in the S&P BSE Sensex.
 

Factors to watch out for: Management's commentary on status of non-core assets like Nabha power, metro ridership, and financial assistance.
 

Here's what top brokerages estimate for L&T's Q1FY4 numbers:
 

Prabhudas Lilladher

Analysts expect consolidated revenue growth of 12.4 per cent YoY, led by growth in IT, energy, hi-tech manufacturing, and developmental projects. Strong tender pipeline from domestic as well as exports market is likely to drive order inflows, they added. Adjusted PAT, too, is likely to grow 25 per cent YoY to Rs 2,127 crore, while margins are expected to grow up to 11.3 per cent in the June quarter.
 

Nuvama Institutional Equities

The brokerage firm expects L&T's revenue to grow 10 per cent YoY to Rs 39,471 crore in Q1FY24. However, a sequential decline of 32 per cent is expected from Rs 58,335 crore in Q4FY23. Analysts believe that private capex is yet to show its best despite strong momentum seen in international hydrocarbon order-book. Moreover, they anticipate pressured margins in H1FY24 to expand going ahead as commodity prices cool off.
 

Kotak Institutional Equities

Analysts bake in improved construction activity across projects during the quarter to help grow revenues 12.3 per cent YoY to Rs 40,273 crore in Q1FY24. Ebitda, too, is likely to grow 15.4 per cent YoY to Rs 4,564 crore in Q1FY24, with Ebitda margin expanding up to 29 bps to 11.3 per cent on lower commodity costs. That said, they estimate earnings per share (EPS) at Rs 14.3 apiece from Rs 12.1 apiece, in the year-ago period.