Buy Larsen and Toubro; target of Rs 1640: ICICI Direct

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26 Aug, 2025 12:21

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L&T’s adjusted standalone revenues (ex-E&A business) for the quarter degrew 1.3% YoY to Rs 19619.8 crore vs. our estimate of Rs 19984.8 crore. On standalone basis, infrastructure segment revenue (contributing ~77%) fell 7.9% to Rs 15106.8 crore YoY due to job mix and site productivity though execution improved sequentially due to higher work force mobilisation and supply chain normalisation. On a consolidated basis, adjusted revenues from continuing operations fell 1.8% to Rs 35596.3 crore YoY. During the quarter, standalone EBITDA margins improved 210 bps to 9.5% (vs. our estimates of 8.0%) on a YoY basis led by control on operating expenses, job mix and better performance in others segments. On a consolidated basis, EBITDA margins came in at 10.5% (vs. 11.1% in Q3FY20).

We value L&T on SoTP (base business at 20x FY23E EPS of Rs 49.5) basis with a target price of Rs 1640 (earlier TP of Rs 1045). We change our rating from HOLD to BUY.

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