L&T Share Price Falls 5% Despite Q3 Revenue Growth

L&T Share Price Falls 5% Despite Q3 Revenue Growth

VoM News Desk | January 31, 2024 | 10:33 AM IST | Breaking News | Follow on Google News

L&T Share Price Falls 5% Despite Q3 Revenue Growth/Mint

L&T Share Price Falls 5% Despite Q3 Revenue Growth

Larsen & Toubro Ltd (L&T) witnessed a 5% decline in its share price during morning trades on Wednesday despite reporting a 19% year-on-year growth in consolidated revenues to ₹55,128 crore for the October-December 2023 quarter. The profit also grew 15% YoY to ₹2,947 crore.

Key Points:

1. Order Book Performance:

• International Orders: Surged 230% YoY to ₹50,600 crore.
• Domestic Orders: Almost halved to ₹25,400 crore.
• Total New Orders: Just under ₹76,000 crore, a 25% increase YoY.

1. Margins and Earnings:

• Ebitda: Rose 14% YoY to around ₹575 crore.
• Margins Below Expectations: Analysts noted margins were below expectations due to legacy order execution and new orders not achieving the margin recognition threshold.
• Jefferies Analysis: Core E&C margin down 70 bps YoY in 3Q at 7.7%. Jefferies lowered Ebitda estimates by 2-3% in FY24-26.

1. Analysts’ Views:

• Centrum Broking: Reported a marginally weak set of results; revenue 5% ahead of expectations, margins 90 bps lower, and net profit 10% below estimates.
• Motilal Oswal Financial Services (MOFSL): Expects L&T to benefit from a strong addressable market and has increased the target price to ₹4,200 based on the sum-of-the-parts (SOTP) methodology.
• Jefferies India Pvt Ltd: Sees upside for the stock price led by order flows, even though core E&C margin was weak in 3Q. Revised target price of ₹4,135.

Market Reaction:

Despite the positive revenue growth and strong international orders, L&T’s share price faced a 5% decline. The market reaction could be influenced by margin concerns and the domestic order flow decline.

Analyst Outlook:

While there are concerns about margins, analysts seem optimistic about L&T’s order flow traction and execution strength. Jefferies believes order-flows could drive the stock higher in the next 12 months.

Note: All figures and percentages mentioned are based on available information at the time of the report.

VoM News Desk

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