L&T hits all-time high on robust Rs 5.1 trillion order book and strong outlook

Shares of Larsen & Toubro (L&T) surged to an all-time high of Rs 3,948, continuing a five-day rally with a 2 per cent gain in intra-day trade on December 9, 2024. The stock outperformed the Nifty 50, which dipped 0.31 per cent to 24,602 during the session. L&T has advanced 6 per cent in a week, eclipsing the benchmark index's 2.3 per cent rise, and recorded a 13 per cent gain over 12 trading sessions since November 21.

Order inflows and market expansion drive optimism

L&T has consistently strengthened its market position through significant order inflows. Its consolidated order book reached Rs 5.1 lakh crore at the end of September 2024, up from Rs 4.76 trillion in March. Notably, 40 per cent of its order backlog stems from international markets, showcasing the company’s global reach. A substantial portion of the orders includes price variation clauses, mitigating commodity risk.

The company has also expanded into new segments such as renewable energy and semiconductors. A recent Rs 15,000 crore order for NTPC’s thermal power projects in Madhya Pradesh and Bihar underlines its leadership in large-scale infrastructure projects.

Guidance aligns with growth trajectory

For FY25, L&T targets a ten per cent-plus growth in order inflows and a 15 per cent revenue increase. Earnings before interest, tax, depreciation, and amortization (EBITDA) margins are projected at 8.25 to 8.5 per cent, driven by a robust execution pipeline and diverse operations.

Analysts foresee sustained growth

Analysts expect L&T’s revenues and profit after tax to grow at a compound annual growth rate of 14.7 per cent and 15.1 per cent, respectively, over FY24-FY26. With a focus on improving return ratios and leveraging private capital expenditure in domestic markets, the company is well-positioned for long-term growth.

L&T’s diversification into high-potential sectors, combined with its execution capabilities, underpins its bullish market outlook, with the stock gaining momentum amid a subdued broader market.