L&T share price up 2% on order win; Morgan Stanley remains overweight

Larsen & Toubro share price gained more than 2 percent in the morning trade on April 24 after the company said that L&T Construction had bagged the Eastern Dedicated Freight Corridor Project contract.

Railways strategic business unit of L&T Construction's Transportation Infrastructure IC in consortium with M/s Kyosan Electric Manufacturing Co Ltd, Japan has won a significant order in the form of three packages from the Dedicated Freight Corridor Corporation of India Limited. The Design and Build orders involve 2x25 KV Overhead Electrification, Signalling 0 Telecommunication and Associated works in the Dadri - Khurja and Sahnewal - Khurja sections of the Eastern Dedicated Freight Corridor (EDFC). The works are spread across 442 Route Kms and 638 Track kilometers, the company said in a filing to the exchanges.

Global research firm Morgan Stanley maintained an overweight call on the stock, with target raised to Rs 1,117 from Rs 941 per share. It expects public capex to bounce back in FY22. The company's dominance was set to increase, a report by CNBC-TV18 said.

It, however, lowered EPS estimates over FY20-23 by 4-7 percent and expects L&T to come out stronger from the downturn.

Another research firm, CLSA, also has a buy rating, with target at Rs 1,400 per share. Order wins of Rs 28,100 crore in six weeks amid weak investment sentiment was commendable, it said, adding the contracts were balanced across sectors.

The order wins during the COVID-19-period had brought out the strength of L&T's diversified portfolio. L&T was a good proxy for domestic capex, adding the company has a credible strategy to improve both growth and RoE.