Share Market Live

NSE

The shares of Larsen & Toubro on Friday gained as much as 3.34 percent to Rs 1575 as investors took into account L&T's order inflow - which grew by 10 percent and revenue – up 15 percent. The company had earlier guided that both may have a "low-to-mid teens" growth rate.

The infrastructure company stock has gained after five days of consecutive falls, however, it is trading lower than its 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

L&T intraday stock chart (source: BSE)

The consolidated order book of the group stood at record levels of Rs 3,57,595 crore as of March 31, 2022, with international orders having a share of 27 percent, it said.

In an interview with CNBC-TV18, SN Subrahmanyan, MD & CEO, Larsen & Toubro, said that the company saw an increase of 10 percent in order inflows in FY22.

“We are sitting on one of the largest backlog ever in history at about Rs 3,60,000 crore odd. Therefore, plenty of work to be done. Lots of things to be done both technically, physically and otherwise,” he said.

"Now, as we look into a backlog, nearly 85 percent of them have price variation clauses, some kind of reimbursement clauses, various kinds of hedged commodity materials and so on and so forth. About 10-15 percent contracts do have fixed lump sum prices, which we have to perform, because we have the obligation to do that. So we have some risks on that in terms of price increase,” he explained.

He stressed that L&T would go back to its clients at some point to get its cost reimbursed.

“We will, of course at various points of time, go back to the clients to get something reimbursed because at the end of the day we are doing work for them and the cost increase also goes into them," Subrahmanyan said.

Renu Baid, Vice President – Research, IIFL Institutional Equities, said that they have a buy recommendation on the stock despite the margin miss as it is a value pick.

"The decline was on concerns of growth, margins, and overall investment infrastructure slowing down. But if you look at the stock price at Rs 1,525-1,530, the business is trading at almost 12.50-13 times FY24 earnings," Baid said.

"We think this is a very attractive band for the stock. We have a buy recommendation, especially after a reasonably good performance that we have seen in FY22. The company is posturing to maintain the growth momentum in FY23 as well. So we think it is a good value pick," she said.

First Published:May 13, 2022 12:10 PM IST