New Delhi, Jan 31 Larsen & Toubro shares slumped over 4 per cent on Wednesday after the company missed profit estimates due to lower than expected margins.
L&T shares were down 4.4 per cent at Rs 3472 on BSE.
Motilal Oswal Financial Services said in a report that LT's 3QFY24 revenue beat our estimates, but lower-than-expected margins led to a miss in PAT.
The company reported 19%/14%/15% YoY growth in revenue/EBITDA/PAT on a consolidated basis. Core E&C revenue and EBITDA grew by 25%/13% YoY in 3QFY24.
L&T has been benefiting from strong inflows, particularly from international geographies, and has received orders worth Rs 1.8t during 9MFY24 for its core E&C segment.
The company has maintained its focus on mega and ultra-mega projects and has been able to improve working capital YoY to 16.6% of sales. However, margins are still below the guidance owing to legacy order execution and new orders still not achieving the margin recognition threshold, the report said.
“We expect L&T to continue to benefit from the strong addressable market in both India and international locations. We revise our estimates to bake in improved inflows and lower margins. We increase our TP to Rs 4,200 based on the SOTP methodology, valuing the core business at P/E of 28x Mar'26E EPS and a 25% holding company discount for subsidiaries. Our higher multiple takes into account the continuously improving prospect pipeline and improvements in NWC and RoE, despite margins being lower than guidance,” the report said.
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