L&T shares hit 52-week high after UBS lifts target price by Rs 560

Larsen & Toubro (L&T) shares scaled a 52-week high on Thursday after brokerages UBS and Goldman Sachs raised their price targets for the construction major's stock by up to 18 per cent. Both maintained their 'buy' ratings on the stock. L&T shares gained by as much as Rs 89, or three per cent, to Rs 3,050.7 apiece on BSE, trading in high volumes and continuing to rise for the third session in a row. 

At 11:30 am, L&T shares held on to much of their intraday gains, quoting 2.4 per cent stronger for the day at Rs 3,033.6 apiece on the bourse. As many as 63,000 L&T shares changed hands on BSE so far on Thursday as against a daily average of 45,000 over the past two weeks, according to provisional exchange data. 

According to UBS, which raised its target for the stock by Rs 560 to Rs 3,600, the construction conglomerate's new strategy ensures the growth of its export orders. The brokerage pegged compound annual growth rates (CAGRs) in the company's core sales and earnings per share (EPS) for the FY23-26 period at 17 per cent and 32 per cent, respectively. 

The brokerage also highlighted that L&T's cyclical earnings momentum, improving capital allocation, and stakeholder focus make it a better play over short-cycle businesses. Its target implies an upside of 21.6 per cent in L&T shares from their previous close.  

Goldman Sachs, which raised its target for the stock to Rs 3,140 from Rs 2,830, expects the positive trend in the construction company's earnings to continue. The brokerage expects the company's profit, revenue and order inflow to strengthen in the quarter ended September 30. 

The company has bagged orders to the tune of Rs 75,000 crore so far in the current financial year, according to Bernstein.

Meanwhile, L&T said on Wednesday that the settlement of bids on the bourses towards its buyback will take place on Thursday, September 28, instead of Friday, September 29, owing to a change in the bank's working day. Read about the bank holiday in Maharashtra on September 29

The engineering and infrastructure conglomerate concluded a Rs 10,000-crore buyback of shares through the tender route this week, where investors could tender their shares at Rs 3,200 apiece.

How L&T fared in Q1

Larsen & Toubro staged a strong performance with a double-digit margin in the first three months of the year ending March 2024. Its consolidated net profit grew 46.5 per cent on a year-on-year basis to Rs 2,493 crore for the quarter ended June 30, while its revenue grew 33.6 per cent to Rs 47,882.4 crore, both beating Street estimates, according to a regulatory filing. 

The company reported a 23.2 per cent jump in earnings before interest, taxes, depreciation and amortisation (EBITDA) to Rs 4,868.6 crore and registered a margin of 10.2 per cent. 

According to Zee Business research, the conglomerate's quarterly net profit was estimated at Rs 2,110 crore, revenue at Rs 40,619.3 crore and EBITDA at Rs 4,403 crore. 

Its order book expanded to Rs 4.12 lakh crore from Rs 3.6 lakh crore a year ago, with quarterly order inflow up 57 per cent at Rs 65,520 crore.

L&T shares: Past performance

L&T shares have rewarded investors with a return of 44 per cent so far in 2023, a period in which the headline Nifty index has grown 7.6 per cent.

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