Despite muted Q4 performance, brokerage firms expect L&T shares to soar – check targets here

Despite marginal growth in the fourth quarter of FY21, brokerage firms are bullish on India’s largest infrastructure company Larsen and Toubro as they have put a Buy call on the stock. 

L&T reported three per cent year-on-year growth in consolidated net profit to Rs 3293 crore in the March-ended quarter, which was little below the street’s expectations. Meanwhile, it reported a nine per cent YoY growth in consolidated revenues to Rs 48,088 crore in the same quarter. 

Maintaining a Buy call, Morgan Stanley finds the current valuations of L&T compelling. The brokerage firm says, the company’s guidance will be a discussion point but it’s delivered in a fair tougher fiscal, adding further that the flat margin is a positive outcome. It sets a target of Rs 1816 per share. 

Similarly, Nomura maintains a Buy call on L&T with an expectation of a strong order book and higher services driving growth into FY23. The brokerage firm cut current financial year profit by two per cent on near-term execution headwind in Q1 of FY22, however, says sales to rebound sharply. 

Nomura expects near-term EBITDA margin susceptible to rising commodity prices. It sets a target of Rs 1,654 per share. 

Another brokerage firm Goldman Sachs also has a Buy rating on L&T as it believes stars are aligning for the next leg of capex uptick in India. It states, the Q4 results also allay investor worries around structural margin concerns as well as al indicate strong discipline and focus on profitability. 

Amid strong performance and optimistic commentary, Goldman Sachs raises the target for L&T shares at Rs 2000 apiece. 

Meanwhile, JP Morgan maintains Overweight on L&T, but cuts FY22 and FY23 EPS estimate by three and four per cent respectively. It states, the execution headwinds to be transient and commodities not proving to be an unmanageable concern. JP Morgan sets a target of Rs 1815 per share. 

The shares of Larsen and Toubro on Friday had closed at Rs 1415 per share and the stock is down around two per cent during Monday’s pre-open.