The share price of Larsen & Toubro (L&T) declined on December 31, a day after company announced its December quarter results.
Larsen and Toubro on January 30 reported a consolidated net profit of Rs 2,553 crore for the December quarter of 2022-23, up 24 percent from the year-ago period. Revenue from operations zoomed to Rs 46,390 crore, 17 percent above the corresponding quarter last year.
However, its operating margins contracted to 10.9 percent from 11.4 percent a year ago. The infrastructure player explained that the drop in margin was mainly due to merger integration costs in LTIMindtree and higher staff cost in services portfolio.
At 09:36 hrs, Larsen & Toubro was quoting at Rs 2,077.25, down Rs 37.35, or 1.77 percent on the BSE.
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Here is what brokerages have to say about stock and the company post December quarter earnings:
Prabhudas Lilladher
The brokerage house maintained the 'buy' rating with target price of Rs 2,481.
It revised estimates by 0.6 percent/0.8 percent/3.2 percent for FY23/24/25, led by execution pick-up, healthy order book (Rs 3.9 trillion), likely margin revival in core business, improving Hyderabad metro performance and improved working capital to sales ratio.
The company is well-placed to benefit from overall diversified tender prospects with (1) better order conversion in domestic market, (2) significant traction in capex from oil exporting countries mainly in hydrocarbon segment and (3) expected uptick in private capex, the brokerage said.
Jefferies
The research firm has maintained the ‘buy’ rating on the stock with a target at Rs 2,650 as the Q3 EBITDA was in-line with expectations.
The order flow growth was strong, driven by domestic demand, while the management maintained order flow and revenue growth guidance and seemed confident in meeting the upper end or exceeding it on order flow.
Jefferies believes that the company should benefit from execution and margin recovery, reported CNBC-TV18.
Sharekhan
The brokerage house maintained the 'buy' rating with a revised price target of Rs 2,455 per share.
The third quarter performance for FY2023 has been below expectations as the street was expecting margin improvement, given the decline in commodity cost, it said. Further, a cut in margin guidance for the core business may hurt investor sentiments in the short term.
The international outlook is also buoyant, given a healthy order pipeline and emerging opportunities in non-oil segments as well, it said. "The company remains the best proxy for domestic capex with price line.
ICICI Securities
L&T remains the best way to play the capex recovery theme in India given its strong execution capability, presence across diverse sectors and geographies, believes ICICI Securities.
“Focus on monetisation of non-core assets, improving RoEs (Return on Equities) and reducing debt make it an attractive portfolio bet to ride the infrastructure and manufacturing cycle revival theme,” the domestic brokerage firm added.
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