Buy Larsen & Toubro, target Rs 1894: Anand Rathi

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26 Aug, 2025 12:21

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Anand Rathi

Larsen & Toubro reported a growth of 24.2% in its consolidated revenues in Q3FY19. The growth in revenues was driven primarily by better execution in Infrastructure segment, persistent growth in Hydrocarbon segment, Realty segment and services business.

On profitability front, the company’s consolidated operating margins stood 16.7% in Q3-FY19 as against 16.2% at Rs 46,699 million in Q3-FY18, an improvement of ~50 basis points. The improvement in profitability was driven mainly by Services & Realty businesses.

In terms of order book, the company’s unexecuted order book stood at Rs 2,840 billion as of December 2018 of which share of domestic order book stood at 79.2%. During the quarter LT has received orders worth Rs 422 billion, a marginal de-growth of 12% over same quarter previous year.

The new orders continues to be predominantly led by public sector while private sector continues to remain muted.

During the quarter, LT has sustained improvement in execution pace in almost all of its segments and primarily in Infrastructure segment and currently has achieved its highest 4Q-rolling average in past 16 quarters.
In terms of growth outlook, the management has maintained its earlier guidance for a growth of 10% to 12% in orders while on revenue front it maintains a growth target of around 15%.

In terms of profitability the management has guided for sustained improvement in margins within a range of around 50 basis points
Going ahead, we expect the company to continue to gradually improve its performance in medium term and revenues from infrastructure segment should continue to improve on better execution pace, to witness better traction in its other key segments including Defence business segment.
We have incorporated the latest numbers to our models for the company and continue to remain positive for the company.

We maintain our buy rating on the stock with a target price of Rs 1,894 per share.

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