Morgan Stanley bullish on L&T, sees 12% upsurge

Global brokerage firm Morgan Stanley has shared an "overweight" rating on Larsen & Toubro (L&T) with a target price of Rs 4,106 a share, implying an upside of 12 percent from the current level after it won two defence contracts worth Rs 13,370 crore.

The stock of this capital goods major has surged over 8 percent in the past month against a 2 percent gain in the Sensex. The stock touched a 52-week high of Rs 3,738 on January 30.

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Recently, L&T bagged major contract from the defence ministry to supply high power radars to the Indian Air Force. It is a is a static sensor for long range aerial surveillance with higher uptime.

The company also won an order for the supply of indigenously developed Close-In Weapon Systems (CIWS) to the IAF.  CIWS will be deployed at various locations across India to protect vital assets from low flying, low signature aerial threats, including unmanned aerial vehicles.

Morgan Stanley analysts said the commissioning of first hydrogen electrolyser would significantly bolster L&T's green offering. "The CIWS order has already been accounted in Q3 and high performance radar order is new," the brokerage firm said in its recent note.

Earlier, analysts at CLSA, too, shared a "buy" rating on L&T with a target price of Rs 4,360 a share, saying the company's order inflow is expected to beat estimates.  "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.

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