L&T positive after strong Q2 numbers; can gain 15-20% in near term – Check targets

Larsen and Toubro (L&T) traded positively on Tuesday post announcement of second quarter earnings. The Mumbai based multinational conglomerate company on Monday released its September quarter results, reporting a 26 per cent rise in consolidated net Profit After Tax (PAT) at Rs 2,819.20 crore on the back of higher revenue from operations. The company had posted a consolidated net PAT of Rs 2,231.33 crore in the year-ago period, L&T said in a filing to BSE.

The stock opened in green at Rs 2,032 apiece and made an intraday low of Rs 1,990.05. At 12:30 PM, the scrip quoted Rs 2,034 apiece on NSE and BSE, up by half a per cent.

The consolidated revenue from operations increased by 22.9 per cent to Rs 42,762.61 crore from Rs 34,772.90 crore in the July-September quarter a year ago, the filing added.

R Shankar Raman, the company's whole-time director and Chief Financial Officer (CFO), said that the combination of stable margin on a growing revenue and good performance by other elements contributing to income has led to profit growth.

Brokerages have revised the stock price target after L&T's July-September quarter result.

The CFO further said that the company was in the process of divesting its mutual fund business from the financial services business. As L&T Infrastructure Development Projects Limited (L&T IDPL) which is a toll road concession company, it is entering into a phase of final exit arrangement.

"We do hope that like in the case of mutual fund we should be able to sign some documents signalling the commencement of divestment procedure...We are working hard to make sure that we complete the transaction by the end of current fiscal," he explained.

The company is also looking at the best way to divest Nabha Power Plant -- which is owned and operate by L&T.

The company recorded orders worth Rs 51,914 crore at the group level during the July-September period, registering a growth of 23 per cent over the corresponding period of the previous fiscal. During the second quarter, the company bagged orders across various sectors like public spaces, nuclear power, irrigation and renewable. Of the total order inflow, international orders were worth Rs 17,341 crore.

The consolidated order book of the group stood at Rs 3,72,381 crore as on September 30, 2022.

On the outlook, the company said L&T's strategy of focusing on projects, hi-tech manufacturing and IT services in a fast changing global business environment is likely to provide improved returns to all its stakeholders.

Larsen & Toubro has yielded a positive return of over 10 per cent to its investors in the past 1 month and over 20 per cent in 6 months. The stock's 52-week range is Rs 2,078.55 - Rs 1,456.35.