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Motilal Oswal Report
Larsen and Toubro Ltd.'s Q1 FY25 results were 3% ahead of our estimates on both revenue and profit after tax. The company reported 15%/15%/12% YoY growth in revenue/Ebitda/PAT on a consolidated basis.
In a seasonally weak quarter, core engineering and construction revenues and Ebitda also grew by 18%/21% YoY, with core E&C margins improving by 10 basis points to 7.6%. Both core E&C revenue and margin beat our estimates. Core E&C revenue growth was largely driven by sharp improvement in overseas revenue, while domestic revenue was flat YoY due to elections, labor shortage and heat waves.
Order inflows/order book were up by 8%/19% YoY, mainly driven by international geographies. The order prospect pipeline was down by 10% YoY at Rs 9.1 trillion due to a drop in hydrocarbon prospects. Net working capital remained low at 13.9% of sales.
We maintain our estimates and target price of Rs 4,150 based on SOTP, valuing core business at 30 times P/E on June-26E earnings per share and 25% holding company discount for subsidiaries.
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