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Last Updated : Nov 01, 2018 10:09 AM IST | Source:

Global brokerages expect up to 45% upside in L&T after Q2 results

Macquarie has an overweight rating on L&T and has raised its target price to Rs 1,880 from Rs 1,825 while JP Morgan has also maintained its overweight rating on L&T with a target price of Rs 1,570

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Global brokerage firms JP Morgan, Macquarie maintained the overweight rating on Larsen & Toubro (L&T) after Q2 results as net profit was above estimates.

Infrastructure major, L&T reported a net profit of Rs 2,230.5 crore for the September quarter, a jump of 23 percent year on year against Rs 1,819.88 crore during the corresponding quarter of last year.

The company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of Rs 3,770.5 crore during the quarter, a jump of 27 percent from Rs 2,962.2 crore posted during last year.

Among the global brokerages which have reacted after L&T results, Macquarie which has an overweight rating on the company's stocks raised its target price to Rs 1,880 from Rs 1,825 which translates into an upside of nearly 45 percent from October 31 closing price of Rs 1,298.

“L&T delivered spotless set of numbers, and it was a handsome beat on all the fronts. Revenue growth shifted into next gear, led by sharply better infrastructure order execution. Margins and order inflows have potential to surprise positively on guidance,” said the brokerage.

The company reported a revenue growth of 21 percent year on year to Rs 32,080.83 crore from Rs 26,446.76 crore during the previous year.

JP Morgan also maintained its overweight rating on L&T with a target price of Rs 1,570. The company reported a large topline beat led by strong execution in flagship infra segment and core business overall.

The working capital has not deteriorated, despite a strong pick-up in execution. After H1, the global investment bank sees upside risks to estimates.

CLSA maintained its buy rating on L&T with a target price of Rs 1,730. The company managed to do execution pickup without balance-sheet sacrifice which was commendable. “Hydrocarbon remains the star business for L&T as RoE crosses 15 percent after six years,” it said.

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First Published on Nov 1, 2018 10:08 am
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