Bumpy road ahead for L&T as order flows, project execution face challenges

As working capital requirements also rise, analysts estimate earnings to dip in FY21

Larsen & Toubro’s (L&T’s) March quarter (Q4) performance has encouraged analysts to maintain a positive medium-term outlook and ‘buy’ rating on the stock. This was driven by the 5 per cent increase in new orders, along with the commentary on the firm’s preparedness to manage disruption.

 However, it is facing near-term challenges on order inflow, project execution, and increased working capital requirements. This will likely weigh on investor sentiment.
 

L&T’s Q4 revenue growth of 2 per cent was a boost, given the significant decline of 17-20 per cent reported by ABB and Siemens, with order flows also improving.

However, the consolidated order