For Q3FY21, L&T registered strong order inflows at the group level worth Rs 73,233 crore, up 76 per cent YoY, led by mega EPC orders won in infrastructure segment, including high speed rail (HSR), special bridge project, rural water supply scheme (MP), international order in power T&D etc.
Meanwhile international orders for Q3FY21 came in at Rs 10,253 crore, contributing 14 per cent to order inflows. L&T’s order backlog is at a record high of Rs 331,061 crore, up 9 per cent YoY, with international orders constituting 20 per cent of order backlog.
The management said with the spectre of the pandemic yet lingering amidst us, the business pursuits need to factor the safety precautions warranted to ensure responsible conduct towards the new emerging opportunities and growth prospects. Against such a backdrop, the company will focus with cautious optimism on large project wins smart execution of its large order book and preservation of liquidity and optimum use of capital and other resources.
“L&T reported strong order inflows while execution is seeing traction amid higher work force mobilisation and supply chain normalisation that could improve over next few months. Also, improved collections would further help improve working capital situation while cash proceeds from E&A have provided much needed liquidity comfort and ability to repay debt further strengthening the balance sheet,” analysts at ICICI Securities said.
Analysts at YES Securities believe order book diversification, global competence, technology differentiation, proven track record and cost efficiencies bode well for the company. The brokerage raised its FY22 earnings estimates marginally by 2 per cent and retained 'BUY' rating on the stock with a target price target of Rs 1,584. "Core business revenue ramp up, infra margin recovery, prudent capital allocation and improving return ratios over FY21‐23E are key stock triggers," it said.
According to Antique Broking, while near term earnings is expected to remain volatile on account of Covid-19 pandemic-led business challenges and uncertainties, long-term business prospects of L&T remain promising given infrastructure development remains one of the key pivotal theme of the government to revive economy.
"We remain positive on the long-term prospects of the company and maintain our 'Buy' rating on the stock with increased target of Rs 1,655," it said.
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