Shares of Larsen & Toubro will be focus today, June 16 after JP Morgan maintained 'Overweight' coverage on the stock amid easing Middle East concerns.
The brokerage hiked L&T's target price to Rs 5,060, marking a 21.3% upside from the closing price.In its recent note, JP Morgan mentioned that the reopening of Strait of Hormuz will reduce tailwind for FY27 outlook of the company.
L&T is not witnessing any significant disruption in the Middle East and none of the projects have been cancelled amid the tensions in the region. The operations on all the project sites is underway. The company, however faces logistical challenges resulting in higher costs. It is in discussions with clients to pass-on higher these costs. Additionally, L&T is looking at a $30 billion to $50 billion re-construction opportunity.
For FY27, outlook remains healthy with the first half of the fiscal being impacted by the US-Iran war. The brokerage expects that there will be no substantial impact from the conflict after the first quarter. The prospects pipeline for FY27 stands at Rs17.8 trillion against Rs19 trillion year ago. Of this, the infrastructure and utilities pipeline is Rs 9.4 trillion, conventional energy is Rs 5.4 trillion, green energy is Rs 2.5 trillion and manufacturing and products is Rs 495 billion.
L&T's five-year strategy, “Lakshaya 31” (FY26–FY31), aims for steady growth with a target of 10–12% annual order inflow growth and 12–15% revenue growth. At the same time, L&T plans to ramp up capex in new-age areas such as data centres, green hydrogen, semiconductor design, and electronic manufacturing.
L&T shares closed over 3% higher at Rs 4,169.8 apiece on Monday, June 15, while the benchmark Nifty 50 closed 0.98% up.
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