The share price of Larsen & Toubro (L&T) rallied 4.9% to a high of Rs 3,590, intra-day, after reporting its quarterly earnings for the third quarter of FY25. The company reported net profit growth of 14% year-on-year (YoY), which it achieved on the back of a strong order book and a ramp-up in the execution of Projects & Manufacturing (P&M) businesses.
The company posted a consolidated net profit of Rs 3,359 crore in the third quarter of FY25, compared to Rs 2,947 crore in the same quarter a year ago. It announced a consolidated revenue of Rs 64,668 crore in Q3 FY25, an increase of 17%. L&T’s international revenues for the reporting quarter stood at Rs 32,764 crore, which made 51% of the total revenues.
Nuvama retains ‘Buy’ rating on strong order inflow
The brokerage firm Nuvama Institutional Equities has maintained its ‘Buy’ rating on the stock, with an unchanged target price of Rs 4,100. This is due to a strong order book of Rs 5.6 lakh crore and rising execution. However, the brokerage house believes that margins still have some time to increase. It has valued the core business at 25 times the earnings per share for FY27.
“We believe that the core operating profit margin may bottom out at current levels of 8.2% with FY26E/27E having a path towards 8.5–9% as more projects reach margin recognition milestones by next year,” read a report by Nuvama. The brokerage firm has outlined that the company may see a 12% YoY drop in order inflow due to a fall in hydro and carbon-lite prospects. Earlier, it estimated an order inflow of Rs 6.72 lakh crore in Q4 FY25 which it has cut to Rs 5.51 lakh crore for Q4 FY25.
CLSA maintains an ‘Outperform’ rating
Another Brokerage firm, CLSA, maintained its ‘Outperform’ rating on the stock, with a target price of Rs 4,151. It sees the third quarter’s results as a surprise as L&T is all set to beat 3 of its 4 guidance. However, it believes that the margins will improve in the next two fiscal years on lower legacy orders & maturity of execution.
Bernstein sees order inflow stellar
The brokerage house, Bernstein, in a research note, said that L&T’s order inflow in the third quarter was stellar. However, on the revenues, it said the execution slowed down due to the domestic environment.
» Read More
