Target: ₹4,150
CMP: ₹3,623
Larsen Toubro’s Q1-FY25 results were 3 per cent ahead of our estimates on both revenue and PAT. The company reported 15/15/12 per cent y-o-y growth in revenue/EBITDA/PAT on a consolidated basis. In a seasonally weak quarter, core E&C revenues and EBITDA also grew by 18/21 per cent y-o-y, with Core E&C margins improving by 10 bps to 7.6 per cent. Both Core E&C revenue and margin beat our estimates.
Core E&C revenue growth was largely driven by sharp improvement in overseas revenue, while domestic revenue was flat YoY due to elections, labor shortage and heat waves.
Order inflows/order book were up by 8/19 per cent y-o-y, mainly driven by international geographies. The order prospect pipeline was down by 10 per cent y-o-y at ₹9.1 lakh crore due to a drop in hydrocarbon prospects. NWC remained low at 13.9 per cent of sales.
We maintain our estimates and TP of ₹4,150 based on SOTP, valuing core business at 30x P/E on Jun’26E EPS and 25 per cent holding company discount for subsidiaries.
Key risks: A slowdown in order inflows, delays in the completion of mega and ultra-mega projects, a sharp rise in commodity prices, increase in working capital, and increased competition are a few downside risks to our estimates.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.