Civil construction in India is a pivotal sector, projected to reach $1.4 trillion by 2025. With over 5,800 civil engineering colleges and a workforce of approximately 50 million, it significantly contributes to the economy, accounting for 9% of GDP. Urbanization demands innovative infrastructure solutions to support a population expected to hit 1.64 billion by 2047.
With a market capitalization of Rs 4.87 lakh crore, the shares of Larsen & Toubro Ltd were trading at Rs 3,548.00 per share, increasing around 2 percent as compared to the previous closing of Rs 3,482.95 apiece.
Brokerage Recommendation:-
JP Morgan, one of the well-known brokerages globally, gave a ‘Buy’ call on the real estate stock with a target price of Rs 4,360 apiece, indicating a potential upside of 23 percent from Monday’s price of Rs 3,546.70 per share.
Rational:-
As per the brokerage, L&T is well-positioned to gain from the continuing capital investment cycle in both India and the Middle East. The business also stated that robust earnings growth expectations, underpinned by a bottoming out of its Plant and Machinery (P&M) margins, will operate as a tailwind for future earnings.
Order Book:-
The company’s total order book stands at ₹4.91 trillion, marking a 19% year-on-year growth. Of this, 62% is domestic and 38% international, with the Middle East accounting for 92% of the international orders, highlighting strong overseas demand from the region.
Recent order:-
Earlier this month, the infrastructure business received a Rs 1,000 crore order from the state-owned Rashtriya Chemicals and Fertilizers Ltd (RCF) to build a 1200 MTPD (DAP base) complex fertilizer plant at its Thal site.
The project will be done on a lump-sum turnkey (LSTK) basis and is estimated to be worth Rs 1,000.27 crore, excluding GST. The building timeframe for the facility is estimated for 27 months.
Business Segment Performance:-
The infrastructure segment recorded order inflows of ₹401 billion, remaining largely flat year-on-year, though it saw robust 22% revenue growth, reaching ₹269 billion, largely driven by international project execution. With an order prospects pipeline swelling to ₹6.03 trillion, future growth potential remains optimistic.
In the energy sector, the hydrocarbon segment secured numerous domestic offshore contracts, propelling the pipeline to ₹2.62 trillion. While revenues surged by 27% to ₹85 billion, the EBITDA margin dipped to 8.7% due to early-stage project execution challenges.
Hi-Tech manufacturing, with an order book of ₹338 billion and a prospect pipeline of ₹320 billion, saw margin improvements attributed to cost savings in execution, reflecting efficiency gains even amid growing industry demands.
IT services experienced a modest 6% revenue growth to ₹115 billion, hampered by subdued global macroeconomic conditions. However, a healthy deal pipeline across subsegments offers hope for continued resilience and adaptation in this evolving landscape.
L&T Finance reached a significant milestone with 95% retailization of its loan book, while retail disbursements soared by 33%, underscoring a strategic pivot toward retail lending that promises sustained growth and stability.
Company profile:-
Larsen & Toubro Ltd is a multinational conglomerate that primarily provides engineering, procurement, and construction (EPC) solutions in key sectors such as infrastructure, hydrocarbon, power, process industries, defense, information technology, and financial services in both domestic and international markets.
Written by:- Abhishek Singh
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