 "L&T Q4 preview: Strong order inflow may drive profit up to 90% higher QoQ")
L&T Q4FY23 preview: Capital goods firm Larsen and Toubro (L&T) has had a stellar run on the bourses thus far this calendar year.
Shares of the company, which hit a record high of Rs 2,416 on May 5, has surged 13 per cent year-to-date (YTD) as against 1.5 per cent rise in the benchmark S&P BSE Sensex. The S&P BSE Capital Goods index, meanwhile, is up 11.8 per cent.
Brokerages see a strong sequential growth in the company’s bottom-line in the March quarter of FY23 (Q4FY23) on the back of improved construction activity and lower commodity prices.
The company is scheduled to report its Q4 results on Wednesday, May 10. It may also announce dividend for the financial year 2022-23.
Here’s what key brokerages expect:
BNP Paribas
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The global brokerage expects LT to report a revenue growth of 13 per cent YoY, at Rs 59,812.7 crore, on the back of strong infrastructure, energy and hydrocarbon segments, led by the domestic and Middle East regions.
LT has announced orders worth Rs 25,800 crore for Q4FY23, and based on a 42 per cent disclosure rate, it estimates core order inflow to be more than Rs 60,000 crore and total order inflow to cross Rs 76,000 crore during the quarter.
Operationally, Ebitda margin could decline 20bps YoY to 12.1 per cent as the benefits of operating leverage are likely to be offset by commodity inflation. We expect Ebitda and adjusted net profit to increase by 11 per cent (Rs 7,260.4 crore) and 13 per cent (4,078.2 crore) YoY, respectively.
Sharekhan
This brokerage sees L&T’s Q4FY23 revenue at Rs 60,334 crore, up 14.2 per cent YoY from Rs 52,851 crore clocked last year.
While operating profit (Ebitda) margin may dip 39bps to 12 per cent, net profit is seen rising 17 per cent on year to Rs 4,236 crore. PAT was Rs 3,621 crore last year.
Kotak Institutional Equities
It expects 10 per cent YoY improvement in the core EPC revenues, as it bakes in improved construction activity across projects in Q4FY23.
Total order inflow is pegged at Rs 63,000 crore for Q4FY23 driven by hydrocarbon, water, B&F, metals and mining, and transmission. Given this, it expects the core E&C business' Ebitda margin at 10.4 per cent, up 40 bps YoY.
On consolidated basis, net sales are anticipated to grow 12 per cent YoY/28 per cent QoQ to Rs 59,252.9 crore. Ebitda, meanwhile, could increase 12.4 per cent YoY/44.5 per cent QoQ to Rs 7,331.4 crore.
Reported profit is pegged at Rs 4,407.1 crore (up 22 per cent YoY/73 per cent QoQ).
Nuvama Institutional Equities
The brokerage sees L&T’s revenue swelling 12 per cent on year/28 per cent sequentially to Rs 59,252.2 crore, while Ebitda could come in at Rs 7,411 crore.
Core PAT, it said, may surge 90 per cent QoQ (27 per cent YoY) to Rs 4,589.92 crore.
"The company’s strategic plan till FY26 is focussed on making subsidiaries self-sustainable, strong presence into green energy (hydrogen, battery storage etc.) and non-core exits. With robust order inflow growth, commodity prices cooling-off, refinancing of Hyderbad metro etc., margins may see expansion going forward," it said.