Larsen & Toubro (L&T) is India’s leading engineering and construction company, specializing in EPC projects, high-tech manufacturing, and services. Its core operations span across infrastructure, heavy engineering, defense engineering, power, hydrocarbons, and various service-based businesses.
Stock Performance
With a market capitalization of 4.8 lakh crores, the shares rose to an intraday high of Rs 3,519 in Friday’s trading session. This is a slight increase when compared to the previous closing price of Rs 3,503.30
Over the past six months, the shares of Larsen & Toubro fell 9 percent. The stock is currently trading at a discount of 12 percent from its December peak of Rs 3,963.
Order Book Analysis
In Q3 FY25 alone, Larsen & Toubro Ltd saw an order inflow of over Rs 1 lakh crore. This value is 53 percent higher than what it was the previous year and notably is also the highest ever in a quarter. Most of these were large orders across Infrastructure, Energy and Hi-Tech Manufacturing segments.
Even in the 9-month period, the company saw a 16 percent growth in order inflow to Rs 2.6 lakh crore. As for the total order book, it stands around Rs 5.6 lakh crore, marking a 20 percent increase when compared to the previous year. International orders constitute about 42 percent of this value.
Market Dynamic
India has been experiencing a broad sell-off with Nifty 50 losing 10 percent in just six months. Such market conditions, including fluctuations in investor sentiment and sectoral shifts, also played a role in Larsen and Toubro’s stock performance.
Interest Rates
L&T, being an infrastructure and EPC company, relies heavily on debt financing for project execution. With RBI maintaining higher interest rates to control inflation, L&T’s cost of borrowing increased. Higher interest payments resulted in reduced net profit margins.
Further, investor expectations for government spending in the Union Budget were not met. The capex increase was perceived as modest, resulting in further weakening of investor sentiment.
Financial Performance
In the latest quarter, the company reported a 17 percent growth in its revenue from Rs 55,128 crore in Q3 FY24 to Rs 64,668 crore in
Q3 FY25. This was accompanied by a 11 percent increase in net profits from Rs 3,593 crore to Rs 3,974 crore during the same period.
Future Outlook
L&T is confident of exceeding its 10 percent order inflow growth target for FY25, supported by a strong project pipeline. The company expects its projects and manufacturing segment to maintain a stable EBITDA margin of 8.2 percent for the year.
Written by Shwetha Sairam
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