L&T shares jump 5% to hit all-time high, here’s what brokerages have to say
Larsen & Toubro (L & T) shares jumped more than 5 percent to reach their highs of all time of Rs 1,624.90 in intraday trade in BSE on July 15.
In 2021, shares had risen 20 percent in BSE, on July 14, against 11 percent rally in Sensex. If the stock closed in Green on July 15, it would be the fourth day in a row from the increase.
L & T is a largecap stock. The company operates in technology, engineering, construction, manufacturing and financial services and has a global presence.
Arafat Saiyed, Senior Research Analyst at Reliance Securities, shows that L & T is one of the main beneficiaries of an upcycle investment in India.
“The company has maintained the book of its order with strong inflows of orders due to strong performance of the main segment i.e. infrastructure and hydrocarbons,” he said.
“The plan to get out of the development assets, especially the monetization of Hyderabad Metro is a long-term positive. L & T worthy of a higher assessment given to restarting booking activities on large multilateral projects, the performance of a healthy subsidiary.”
In accordance with the JM Financial brokerage company, L & T estimating a strong ordering pipe for FY22 from Rs 9.6 lakh Crore versus 8.5 lakh crore at FY21, divided between RS 6.56 Lakh Domestic Crore and RS 2.5 Lakh Crore International ,
“Pipes are dominated by: (a) infra (mix 77 percent) in all sectors such as T & D, civil, pipeline, waste / waste), metro, solar, data center, capex, and (b) hydrocarbons ( 16 percent mix) Behind the increase in oil prices, “JM Financial said.
“Given the L & T balance sheet strength, high order books, 12 percent higher tender pipes, growth management trust of 13-15 percent while maintaining margins, we find that L & T has a faster execution recovery advantage,” JM Financial said.
Brokerage companies believe that the lost execution in FY21 will be made in FY22 because some L & TS projects are infrared and important projects – airports, bridges, metro, etc. for state governments and trade unions.
“Many of these projects are also multi-lateral funded, which allows for a smooth payment cycle. Therefore, we found a sharp leap in FY22 income considering the low FY21. We also believe his arm is also in the right position.
The Augers are good for Larsen & Toubro, “JM Financial said.
The company will release a June scorecard card on July 26 where expected to report a series of strong numbers on the basis of the year (yoy base. However, on a quarter base in the quarter (Qoq), the number can be subdued.
The numbers might be strong YoY because of the low basis as a hit performance of the Coronavirus pandemic in the June quarter of TA21.
Icici Direct brokerage company expects Larsen and Toubro to report net profit at Rs 604 Crore, up 114.5 percent yoy, but down 75.5 percent Qoq. Net sales are expected to increase by 46.1 percent yoy, but down 60 percent of Qoq to Rs 11,904.4 Crore.
Brokerage Companies, Financial Services Oswal Motilal expect 378.8 percent YoY jumping on pat reported. Income can see a leap of 42.4 percent yoy.
“Be careful with ramp-up in the trend of execution and views in various segments. Outlook for FY22 nine months and comments about working capital management is the main monitoring,” said Motilal Oswal.
With the market at a record high, some index majors do it very well and L & T among them, Ajit Mishra, VP Research, Relespare Broking, observed.
“It has witnessed a breakout of the consolidation range of Rs 1,330-1,580 after spending almost five months. We hope this momentum continues, citing the increase in volume seen,” Mishra said.
“Traders can consider making new positions at the current market price of Rs 1.610 for the target position of Rs 1,750+. If there is a decrease, the RS Zone 1,540-1,570 will act as a pillow. They must maintain a stop loss on the RS. 1,530 for this position,” Mishra said.
