Street positive on L&T, expects 25-30% upside

Mumbai: Most analysts remained upbeat on the prospects of Larsen & Toubro's (L&T) shares even as the fourth-quarter earnings at the Mumbai-based engineering and construction conglomerate fell short of market expectations, triggering the biggest single-day fall in the stock price in three years on Thursday.

L&T fell over 5% on the bourses. The shares made an intraday low of ₹2,237.35 apiece on the NSE in Thursday's trading before closing at ₹2,242.15, down 5.17%.

Jefferies and CLSA remain most optimistic and advised their clients to 'buy' L&T shares. Both brokerages see upside potential in the range of 25-30% from the current levels.

"Key surprise in 4Q orders was mega defence orders, which it did not announce," read a CLSA note to its clients. "Key message was that not only did it beat three of four FY23 guidance targets, but it guided for an even stronger FY24 on a higher base."

Of the 21 analysts who reviewed L&T Q4 earnings, 16 of them have a 'buy' or 'overweight' rating on the stock. Four analysts remain neutral while one recommended clients to 'sell' the stock. The consensus price target rose 1.25% to ₹2,538.93 per share, showed a Bloomberg poll of analysts.

Jefferies sees over 16% upside potential as the company managed to beat consensus on order guidance after seven years and expects the margins to recover going forward.

"Weak margins offset an otherwise strong outlook," said Goldman Sachs in a note to clients.