Buy Larsen and Toubro; target of Rs 4550: Sharekhan

Sharekhan's research report on Larsen and Toubro

Healthy order inflows of Rs. 28,000-47,500 crore during Q2FY2025 led by two mega orders from the Middle East, which comprise over 60% of the order intake. L&T targets order inflow growth of 10% y-o-y, revenue growth of 15% y-o-y and an 8-8.25% OPM for core P&M business for FY2025. Order book at an all-time high of ~Rs 4.91 lakh crore (2.1x TTM revenues). We expect it to benefit from healthy order intake from international segment led by Middle East and pick up in domestic order inflows in H2FY2025. However, current weakness in crude oil pose possible risk for Saudi order inflows.

Outlook

We maintain a Buy with a revised PT of Rs. Rs. 4,550, rolling forward our valuation to H1FY2027E and considering its strong order prospects.

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