L&T grabs 'buy' tag from CLSA; analysts see 28% upside on healthy order pipeline

Global brokerage firm CLSA has shared a "buy" call on capital Larsen & Toubro (L&T) with a target price of Rs 4,360 a share, implying an upside of 28 percent from the last close.

The bullish call came after analysts said India's largest capital goods company is poised to beat their order inflow estimate led by bullet train, defence and private capex in the fourth quarter of the fiscal year 2023-24.

The stock hit a 52-week high of Rs 3,738 apiece on January 30 but has declined more than 3 percent this year against a percent rise in the benchmark Sensex.

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L&T is set to beat its order inflow estimate in the upcoming quarter,  CLSA said. "The order inflow beat expectations followed CCS approval of large defence orders last week. We believe that the margins of the company will improve from Q4FY24, given it has lower legacy orders in its backlog," the brokerage firm said.

Earlier, analysts at LKP Securities also shared a "buy" rating for L&T, with a target price of Rs 3,865 a share as strong order pipeline provided healthy visibility ahead.

"Given the strong order pipeline, revival in private capex, healthy outlook ahead, we remain positive on L&T earnings growth prospects. Stable oil prices also auger well for prospects in the hydrocarbon segment and improve overall prospects in the Middle East," the brokerage firm said.

In Q3FY24, L&T's consolidated sales rose 19 percent year-on-year (YoY) driven by broad-based revenue growth but margins contracted 50 basis points (bps) to 10.4 percent. Across segments, infrastructure grew 27 percent YoY, energy projects were up by 24 percent YoY, and hi-tech manufacturing rose 17 percent YoY.

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