During Q3FY21E, EPC order inflows announced by L&T is estimated to be more than Rs 63,000 crore (as on date, ex-services segment) across High Speed Rail, construction, water effluent, hydrocarbon, transportation, mining equipment, power T&D, heavy civil infrastructure and defence segments indicating robust order inflows for the quarter.
For Q3FY21, ICICI Securities expects reasonable execution pick-up for L&T on a sequential basis as labourers have almost returned across sites at more than 95 per cent of pre-Covid levels during the quarter.
“Consequently, we expect adjusted standalone revenue to grow marginally by 0.5 per cent to Rs 19,985 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to grow by 9.9 per cent to Rs 1608.8 crore with margins expected to improve 30 basis points (bps) to 8.0 per cent and adjusted PAT (Ex-E&A ) expected to grow by 19.2 per cent to Rs 1260.6 crore partly due to higher other income. In our view working capital and cash flow situation will be key monitorable,” the brokerage firm said in a note.
“With new order announcements worth Rs 66,600 crore (at the midpoint range of the new ticket size classification) after the September quarter (2QFY21) result, year to date (YTD) order inflow in the core business now stands Rs 97,000 crore, or around 84 per cent of full-year core E&C order inflow assumption. As we enter peak awarding season in the coming months, we expect flattish growth in core E&C/overall order inflows v/s earlier expectation of a -20 per cent/- 14 per cent decline,” Motilal Oswal Securities said in recent report.
With recovery in sight, the brokerage firm sees room for its core business to see a meaningful re-rating. We maintain our Buy rating with a higher target price of Rs 1,625 per share on account of core business target P/E multiple of 20x v/s long-term average of 22x, and contribution from four listed subsidiaries, after applying a 20 per cent holding company discount, it said.
At 01:54 pm, L&T was trading 1.5 per cent higher at Rs 1,383 on the BSE, against 0.20 per cent decline in the S&P BSE Sensex. A combined 3.6 million equity shares were changing hands on the counter on the NSE and BSE.
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