BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Larsen and Toubro Ltd. reported an expectedly strong Q2 FY24 print with continued momentum in core business revenue growth while infrastructure margin remains subdued.
An increase in order pipeline to Rs 8.8 trillion augurs well for continued acceleration in order inflow growth where energy related capex in the Middle East have been a shot in the arm.
The turnaround in Hyderabad Metro profitability, all-time high PLF in Nabha Power would support further acceleration in bottom line growth.
Ebitda margin has remained subdued mainly on account of legacy projects pertaining to infrastructure segment while IT businesses have seen continued higher employee retention costs.
Looking forward
Management expects legacy projects to be significantly exhausted by Q4 FY24 while incremental execution of large projects could see fulfilment of margin threshold from FY25. Thus, margin recovery for the infrastructure remains a key monitorable.
With the order pipeline getting significantly boosted both on domestic and exports front, there is significantly increased visibility for order inflow growth in the near term.
L&T is well placed to capture incremental business from Middle East from energy as well as other infrastructure segments. We remain positive on the company's strong business model, robust bid pipeline, diversified order book and healthy balance sheet.
We downgrade to 'Neutral' ('Add' earlier) given significant run-up in the stock price (~23% over last six months) with a revised SOTP-based target price of Rs 2,938 (2,848 earlier).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.