Larsen & Toubro (L&T) shares jumped around 3 per cent on Thursday after the company surprised the Street with higher-than-expected margins in the December quarter.
L&T's ebitda margin jumped 190 basis points year-on-year (adjusted margins up 160 basis points) on the back of higher revenues from the infrastructure segment, which contributed 61 per cent to overall sales in the third quarter. Numbers are not comparable with the reported numbers given the demerger of hydrocarbon business.
Deutsche Bank said margin concerns are behind for L&T. Macquarie said its expectations on L&T was ahead of consensus estimates for fiscal years 2013-14 and 2014-15. The brokerage has an "outperform" call on the stock.
Barclays maintained its "overweight" call on the stock (target Rs.1,206) citing expectations of some uptick in infra orders in FY15 post elections.
However, it said that the expansion in working capital from 21 per cent of sales versus 18 per cent of sales post in Q2 led to negative operating cash. There was some impact of hydrocarbon demerger too as working capital trends is relatively better in hydrocarbon, it added.
Dr.Tirthankar Patnaik of Religare Capital Markets told NDTV that L&T has turned in a decent performance. A 10-12 per cent upside in the stock looks possible despite the cut in order book guidance, he added.
As of 1.20 p.m., L&T shares traded 2.8 per cent higher at Rs.1,032.85 after earlier hitting a high of Rs. 1,043.40. The stock was the top gainer on the 50-share Nifty benchmark.
Q3 results:
India's biggest engineering group on Wednesday posted a 12 per cent rise in December quarter net profit. Third-quarter net profit (adjusted for exceptional gains from property last year) rose to Rs.1,136 crore, compared with Rs. 1,150 crore average of estimates from 16 banks and brokerages, according to Thomson Reuters data.
Gross revenue also rose 12 per cent to Rs. 14,534 crore as L&T booked higher revenue on the completion of contracts. New orders grew 21 per cent to Rs. 21,722 crore, thanks primarily to international customers, which accounted for 38 per cent of new business.
Still, L&T cut its order book growth outlook for the current fiscal year, as a surge in overseas orders looked unlikely to offset the impact of a domestic slowdown in an election year.
L&T said it expected its order book, a key gauge of demand, to grow 15 per cent in the fiscal year ending in March, from 20 per cent forecast earlier, due to the poor investment climate, chief financial officer R Shankar Raman said.
However the company had a "fighting chance" of meeting its sales guidance of 15 per cent in the fiscal year, he said after the company released earnings.
"The general weakness of the macro-economic environment continues," Mr Raman told reporters. "Considering that the country is already in election mode, policy issues are still to be addressed in their entirety."
L&T's ebitda margin jumped 190 basis points year-on-year (adjusted margins up 160 basis points) on the back of higher revenues from the infrastructure segment, which contributed 61 per cent to overall sales in the third quarter. Numbers are not comparable with the reported numbers given the demerger of hydrocarbon business.
Deutsche Bank said margin concerns are behind for L&T. Macquarie said its expectations on L&T was ahead of consensus estimates for fiscal years 2013-14 and 2014-15. The brokerage has an "outperform" call on the stock.
Barclays maintained its "overweight" call on the stock (target Rs.1,206) citing expectations of some uptick in infra orders in FY15 post elections.
However, it said that the expansion in working capital from 21 per cent of sales versus 18 per cent of sales post in Q2 led to negative operating cash. There was some impact of hydrocarbon demerger too as working capital trends is relatively better in hydrocarbon, it added.
Dr.Tirthankar Patnaik of Religare Capital Markets told NDTV that L&T has turned in a decent performance. A 10-12 per cent upside in the stock looks possible despite the cut in order book guidance, he added.
As of 1.20 p.m., L&T shares traded 2.8 per cent higher at Rs.1,032.85 after earlier hitting a high of Rs. 1,043.40. The stock was the top gainer on the 50-share Nifty benchmark.
Q3 results:
India's biggest engineering group on Wednesday posted a 12 per cent rise in December quarter net profit. Third-quarter net profit (adjusted for exceptional gains from property last year) rose to Rs.1,136 crore, compared with Rs. 1,150 crore average of estimates from 16 banks and brokerages, according to Thomson Reuters data.
Gross revenue also rose 12 per cent to Rs. 14,534 crore as L&T booked higher revenue on the completion of contracts. New orders grew 21 per cent to Rs. 21,722 crore, thanks primarily to international customers, which accounted for 38 per cent of new business.
Still, L&T cut its order book growth outlook for the current fiscal year, as a surge in overseas orders looked unlikely to offset the impact of a domestic slowdown in an election year.
L&T said it expected its order book, a key gauge of demand, to grow 15 per cent in the fiscal year ending in March, from 20 per cent forecast earlier, due to the poor investment climate, chief financial officer R Shankar Raman said.
However the company had a "fighting chance" of meeting its sales guidance of 15 per cent in the fiscal year, he said after the company released earnings.
"The general weakness of the macro-economic environment continues," Mr Raman told reporters. "Considering that the country is already in election mode, policy issues are still to be addressed in their entirety."
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