L&T jumps over 6% as brokerages give a thumbs up to surprise Q2 results, see up to 22% upside

Nomura joined in with a 'buy' recommendation, setting a target price of Rs 4,100 per share

Shares of Larsen & Toubro (L&T) surged over 6 percent to Rs 3,631 per share on October 31 as brokerages praised its July-September quarter (Q2FY25) performance, which exceeded market expectations, bolstered by strong order inflows and effective project execution. Analysts project an upside potential of around 22 percent for this capital goods giant.

CLSA rated L&T as 'outperform' and set the highest target price of Rs 4,151 per share, noting that L&T achieved its third consecutive quarter of E&C margin growth. The firm highlighted robust order inflows in Q2, even with India’s typically softer quarter, and added that management remains optimistic about achieving its FY25 order inflow goals.

Bernstein also gave an 'outperform' rating, with a target price of Rs 3,891 per share, acknowledging another quarter of solid execution and a strong working capital position.

Meanwhile, Morgan Stanley pointed to Rs 1.17 lakh crore in core orders for the first half of the fiscal year, which it sees as a positive amid weak government spending. They rated the stock 'overweight' with a target price of Rs 3,857 per share.

ALSO READ: L&T Q2 net profit rises 5% to Rs 3,395 crore, beats estimates

Nomura joined in with a 'buy' recommendation, setting a target price of Rs 4,100 per share. Analysts believe L&T’s FY25 order inflow growth target appears feasible following the Q2 performance surprise.

L&T’s Q2 net profit rose 5 percent year-on-year to Rs 3,395 crore, with revenue climbing 21 percent YoY to Rs 61,555 crore. The company reported order inflows of Rs 80,045 crore for the quarter ending September 30, 2024, a decrease of 10 percent compared to the same quarter last year. International orders made up 63 percent of total inflows, amounting to Rs 50,083 crore.

Looking ahead, L&T expects sustained economic growth in India, driven by both public and private investments.

"Investment activity has remained resilient, with government capex rebounding from a Q1 contraction," the company said in a stock exchange filing.

Additionally, L&T noted that a stronger-than-expected southwest monsoon supports a rural economy revival and boosts consumption demand, with new government incentive schemes aimed at improving the availability of skilled labor in India.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.