L&T: Q2 Boost: Analysts raise L&T forecasts

Mumbai: Larsen & Toubro’s (L&T) better-than-expected second quarter earnings Monday prompted analysts at various domestic and foreign brokerage firms to raise their earnings and price forecasts citing strong executive and attractive valuations.

Shares of the Mumbai-based engineering and construction conglomerate touched a high of ₹2,055 per share on the BSE before trending lower in the latter half of the day to close at ₹2,024.85 apiece.

Nomura, CLSA, HSBC and Jefferies maintained their ‘buy’ rating on the stock, while JPMorgan, Macquarie and Morgan Stanley retained their outperform outlook on the stock. These brokerages expect the stock to rise between 6% and 17% from their respective price forecasts.

CLSA said L&T’s execution is picking up well, although the margin picture still remains weak.

However, JP Morgan remains confident of the company achieving its margin guidance despite the skepticism around the same.

Of the 40 analysts tracking the stock, 39 have a positive view and 1 has a sell rating. Analysts have a median target price of 2,235 per share. That translates roughly into gains of 11% from the current market price.

L&T’s stock had risen nearly 8% in the previous five sessions in anticipation of the second quarter earnings.

“Stronger traction on domestic execution and inflows bode well,” said Credit Suisse in a client note. “Valuations are reasonable at current levels,” it said as it maintained its ‘outperform’ recommendation and kept its target price unchanged at 2,250

Antique Stock Broking has the most optimistic view with a target price of 2,490 apiece .