L&T shares jump 5% on positive Q3 earnings, solid order book growth

L&T shares have delivered muted returns in the last three months.

Shares of construction major Larsen & Toubro jumped nearly 5 percent on January 31 after the company reported positive earnings for the December quarter, marked by a rise in net profit and revenue, coupled with solid gains in its order book.

At 09.16 am, shares of L&T were trading at Rs 3,552 on the NSE.

L&T clocked in a 14 percent increase in its Q3 net profit at Rs 3,359 crore, up from the Rs 2,947 crore that it reported in the year-ago period. The firm's revenue rose 17 percent to Rs 64,668 crore in Q3FY25 as against Rs 55,128 crore in Q3FY24. Despite the rise, both net profit and revenue missed Moneycontrol's estimates of Rs 2,947 crore and Rs 65,065 crore, respectively.

A spike in raw material, components and construction materials costs weighed on the company's operational performance. It dragged the company's EBITDA margin 70 basis points lower to 9.7 percent in Q3.

Regardless, order inflows remained strong, signaling a turnaround from a sluggish H1 FY25. L&T secured orders worth Rs 1,16,036 crore at the group level in Q3, reflecting a 53 percent on year growth compared to the Rs 75,990 crore orders won in the same period last year.

During the quarter, L&T secured orders across multiple segments, including thermal power, renewables, power transmission, precision engineering, minerals & metals, water, commercial buildings, and hydrocarbon onshore. International orders stood at Rs 62,059 crore, contributing 53 percent of total inflows, compared to Rs 50,562 crore, 67 percent share, in the same period last year.

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As of December-end, L&T’s consolidated order book reached Rs 5,64,223 crore, with 42 percent coming from international orders, marking a stellar jump from Rs 4,69,807 crore in the previous year.

Looking ahead, the management remains confident of surpassing its full-year FY25 guidance, expecting order inflow growth to exceed 10 percent and execution growth to surpass 15 percent. However, operating profit margin is projected to remain stable year-on-year at approximately 8.2 percent.

Brokerage firm Nuvama Institutional Equities believes that L&T strong order book of Rs 5.6 lakh crore, which includes 42 percent international orders and rising execution will aid its growth, though a margin uptick may still be some time away. The brokerage has a 'buy' call on L&T with a price target of Rs 4,000.