L&T share price jumps 6% as Q2 results beat street estimates; details here

L&T share price: Shares of construction and engineering major Larsen and Toubro (L&T) rose up to 5.61 per cent to hit an intraday high of Rs 3,598.40 per share on Thursday, October 31, 2024.

 

The rise in L&T share price came after the company reported a healthy set of September quarter numbers on October 30, 2024, which met street expectations.

 

L&T’s net profit rose 5.4 per cent year-on-year (Y-o-Y) to Rs 3,395.3 crore in the September quarter of FY25, from Rs 3,223 crore in the September quarter of FY24.

 

The company’s revenue from operations, or topline, surged 20.6 per cent annually to Rs 61,554.6 crore, as against Rs 51,024 crore in the same quarter previous fiscal year.

 

 

At the operating level, earnings before interest, tax, depreciation and amortisation jumped 13 per cent Y-o-Y to Rs 6,362 crore in Q2FY25, from Rs 5,632 crore in Q2FY24.

 

However, Ebitda margin took a dent as it squeezed 70 basis points (bps) to 10.3 per cent in Q2FY25, as against 11 per cent in Q2FY24.

 

SN Subrahmanyan, chairman and managing director said, “We have delivered yet another quarter of strong financial performance despite the continuing global macroeconomic volatility. The projects & manufacturing businesses of the Company continue to perform well.”

 

The company also received orders of Rs 80,045 crore at the group level during the quarter ended September 30, 2024, registering a sequential growth of 13 per cent and a Y-o-Y decline of 10 per cent.

 

“We have a record order book over Rs 5 lakh crore that is a testimony of our proven competence in the domains of engineering, construction, manufacturing, and project management. Our new transformative investments in Green Energy, Data Centers, Digital Platforms and Semiconductor Design will, besides improving our Digital and Sustainability footprint, compliment our current business portfolio as well. India’s growth story remains intact on the back of continued public capex spends and a visible recovery in private investments as well. We expect the Middle East Capex momentum to remain healthy. The Company remains committed to delivering a sustained performance of growth,” Subrahmanyan added.

 

According to analysts at Nuvama, L&T beat Street’s Q2 Ebitda/PAT estimate by 4 per cent/6 per cent led by robust execution (+21 per cent Y-o-Y) with core operating profit margins (OPMs/) at 7.6 per cent (+20bp Y-o-Y) seeming to have bottomed out. Although order inflows fell 10.2 per cent YoY due to high-base of Rs 40,000 hydrocarbon orders last year, order inflow guidance is retained at 10 per cent YoY growth implying a heavy H2FY25. Order book at all-time high of over Rs 5 trillion provides strong revenue visibility (~2.3x FY24 sales).

 

Therefore, analysts have upgraded L&T to ‘Buy’ on price correction, as the stock has underperformed since our downgrade in January 2024. The brokerage has retained FY25 guidance of 10 per cent/15 per cent order inflow/sales growth with 8.2 per cent core OPMs (bottomed out). Large order inflow is likely in H2 across the Middle East and India. 

 

“We are revising FY25E/26E/27E EPS by 2 per cent/(3 per cent)/(2 per cent) with a TP of Rs 4,000 (from Rs 4,040),” Nuvama said in a note.

 

Outlook

 

The Company is confident that the structural reforms implemented by the government over the past decade will enhance the quality of India's growth and lay a solid foundation for realising a Viksit Bharat by 2047. 

 

“The Company remains committed to pursuing technology-driven growth and delivering profitable returns to all its stakeholders on a sustained basis,” L&T said in a statement.

 

At 9:23 AM, L&T shares were trading 5.47 per cent higher at Rs 3,593.45. In comparison, BSE Sensex was trading 0.17 per cent lower at 79,809 levels.