L&T rallies over 3% on strong Q3 show; but trims growth view
Larsen & Toubro Ltd rallied as much as 3.3% in morning trade on Thursday, after the company continued to report a strong earnings performance.
By ET Online |
NEW DELHI: Larsen & Toubro Ltd (L&T) rallied as much as 3.3 per cent in morning trade on Thursday, after the company continued to report a strong earnings performance, with EBITDA growth led by reported margin expansion of 186 bps YoY.
On the EBITDA front, company reported a YoY increase of 186bp to 11.6% against Street expectations of 10.0 per cent, owing to better-than expected execution.
At 09:40 a.m.; L&T was trading 2.6 per cent higher at Rs 1031.80. It has hit a low of Rs 1010 and a high of Rs 1038.45 in trade today.
During the quarter, the company has demerge and transfer all the assets and liabilities of the hydrocarbon business to its wholly owned subsidiary L&T Hydrocarbon Engineering ltd (LTHE) w.e.f December 20, 2013.
L&T reported recurring profit after tax, excluding exceptional items and the hydrocarbon business which has been hived off into a subsidiary, of Rs 1,136 crore for October-December, up 12 % over the corresponding quarter of the previous year.
"Our estimates are not comparable with the reported numbers given the demerger of Hydrocarbon business, the reported recurring PAT (ex hydrocarbons) of Rs11.36 bn is higher than our estimates (which includes hydrocarbon business), suggesting a strong beat," Barclays said in a report.
"Management expects to achieve its revenue growth guidance of 15% YoY and expects order inflows to be in a 15-20 per cent band," added the report.
The brokerage firm is of the view that with L&T continuing to perform well in a tough environment, the good quarter performance makes us retain our ‘Overweight’ rating on the stock.
The healthy growth in revenues was mainly driven by (a) strong execution in the engineering and construction (E&C) and (b) execution pickup in International orders, Angel Broking said in a report.
However, engineering major Larsen & Toubro expects tough times to continue despite reporting healthy quarterly earnings, as the weak investment climate has slowed down new orders, say analysts.
For FY2014, given the current macro environment and 9MFY2014 performance the management has slightly revised its guidance of revenue and order inflow guidance to 15 per cent from 20 per cent forecast earlier.
"The guidance is mainly based on (a) high share of exports in both order inflows and revenues (power T&D and hydrocarbon) and (b) continued momentum in infrastructure segment," said the Angel Broking report.
The brokerage firm is of the view that L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to its peers. They continue to maintain ‘Buy’ rating on the stock with a target price of Rs 1,237.
On the EBITDA front, company reported a YoY increase of 186bp to 11.6% against Street expectations of 10.0 per cent, owing to better-than expected execution.
At 09:40 a.m.; L&T was trading 2.6 per cent higher at Rs 1031.80. It has hit a low of Rs 1010 and a high of Rs 1038.45 in trade today.
During the quarter, the company has demerge and transfer all the assets and liabilities of the hydrocarbon business to its wholly owned subsidiary L&T Hydrocarbon Engineering ltd (LTHE) w.e.f December 20, 2013.
L&T reported recurring profit after tax, excluding exceptional items and the hydrocarbon business which has been hived off into a subsidiary, of Rs 1,136 crore for October-December, up 12 % over the corresponding quarter of the previous year.
"Our estimates are not comparable with the reported numbers given the demerger of Hydrocarbon business, the reported recurring PAT (ex hydrocarbons) of Rs11.36 bn is higher than our estimates (which includes hydrocarbon business), suggesting a strong beat," Barclays said in a report.
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"Management expects to achieve its revenue growth guidance of 15% YoY and expects order inflows to be in a 15-20 per cent band," added the report.
The brokerage firm is of the view that with L&T continuing to perform well in a tough environment, the good quarter performance makes us retain our ‘Overweight’ rating on the stock.
The healthy growth in revenues was mainly driven by (a) strong execution in the engineering and construction (E&C) and (b) execution pickup in International orders, Angel Broking said in a report.
However, engineering major Larsen & Toubro expects tough times to continue despite reporting healthy quarterly earnings, as the weak investment climate has slowed down new orders, say analysts.
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For FY2014, given the current macro environment and 9MFY2014 performance the management has slightly revised its guidance of revenue and order inflow guidance to 15 per cent from 20 per cent forecast earlier.
"The guidance is mainly based on (a) high share of exports in both order inflows and revenues (power T&D and hydrocarbon) and (b) continued momentum in infrastructure segment," said the Angel Broking report.
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The brokerage firm is of the view that L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to its peers. They continue to maintain ‘Buy’ rating on the stock with a target price of Rs 1,237.
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