L&T shares fall 7% as Q3 misses estimates

Shares of Larsen & Toubro (L&T) declined as much as 7% on Wednesday, emerging as top laggard on the bourses, after its December quarter earnings missed Street estimates. The stock has fallen more than 8% in two sessions after gaining 4.5% in the previous three sessions.

Extending losses for the second straight day, L&T shares opened down 3% at ₹3,524.85 on the BSE, after ending 2% lower at ₹3,633.40 in the previous session. During the trading so far, the Sensex heavyweight declined as much as 6.7% to hit an intraday low of ₹3,387.40, registering its biggest single day fall in the calendar year 2024.

At 12:00 PM, L&T shares were trading at ₹3,495.95, down 3.8%, while the market capitalisation slipped to 4.8 lakh crore with 2.8 lakh shares changing hands over the counter as compared to two-week average volume of 0.96 lakh shares.

L&T shares touched its 52-week high of ₹3,738.90 in the previous session, rebounding 80% from its 52-week low of ₹2,073.85 touched on January 31, 2023. In the last six year, L&T shares have risen 30%, while it slipped over 1% in a month.

L&T released its Q3 numbers post-market hours yesterday, posting a consolidated profit after tax (PAT) of ₹2,947 crore, registering a growth of 15% compared to the corresponding quarter of the previous year. The consolidated revenues stood at ₹55,128 crore in Q3 FY24, recording a YoY growth of 19%, aided by ramp up in execution of the strong order book in the projects and manufacturing portfolio. International revenues during the quarter was at ₹24,300 crore, constituting 44% of the total revenue.

S.N. Subrahmanyan, Chairman and Managing Director, L&T says, “We have registered yet another quarter of strong performance, despite the headwinds from a volatile global environment and consequent supply chain constraints. Our nine month order inflow has crossed the FY’23 level. This is a testament to our wide capability spectrum, diversified presence, financial strength and most importantly the faith reposed in us by our customers.”

Subrahmanyan further says that the group forayed into fabless semiconductor chip design during the quarter. “Our bold strides in new age sectors, including Digital Platforms, Data Centres, and Green Energy will pivot us into a technology–led conglomerate.”

He adds that the conglomerate is currently witnessing improved capex spending in both our primary geographies of India and Middle East. “Despite continued global macroeconomic and geopolitical volatility we remain positive about the investment spending continuing in the medium term,” he says.

The company received orders worth ₹75,990 crore at the group level during the quarter ended December 31, 2023, a growth of 25% on an annual basis. The orders were received across various businesses like offshore vertical of hydrocarbon, solar EPC & power transmission, water utilities, buildings & factories and minerals & metals sectors. International orders were at ₹50,562 crore during the quarter, comprising 67% of the total order inflow.

On a cumulative basis, the order inflow for the nine months ended December 31, 2023 stood at ₹2.3 lakh crore, registering a growth of 49% over the corresponding period of the previous year. International orders were at ₹1.37 lakh crore, constituting 60% of the total orders. As of December 31, 2023, the consolidated order book stood at ₹4.69 lakh crore, with international orders having a share of 39%.

Ananlysts were expecting L&T to post a quarterly net profit of ₹3,400 crore and revenue at ₹54,100 crore. However, most brokerages remain bullish on the engineering and construction major, expecting growth prospects in the medium term.

Post Q3, foreign brokerages such as Jefferies, CLSA, Citi, and Goldman Sachs retained a 'Buy' call on L&T shares with price targets of ₹4,135, ₹4,260, ₹4,082, and ₹3,750, respectively. Meanwhile, Morgan Stanley recommended an 'overweight' rating with a target price of ₹4,171 per share.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)