L&T share price gains on winning large orders; CLSA raises target price
On October 5th, Larsen & Toubro’s (L&T) share price was trading positively as its Buildings & Factories business secured substantial orders in the range of Rs 2,500-5,000 crore. These orders fall within the “large category” and have been awarded to various business units under L&T’s Buildings & Factories segment.
One of the noteworthy orders involves the construction of a residential township in Bengaluru. This project encompasses the construction of 3,627 apartments, distributed across 19 towers. These towers will be configured with 3 Basements + Ground + 23 to 41 Floors. Additionally, the project includes the construction of 88 villas, along with the development of clubhouses, swimming pools, and other amenity structures. The total built-up area for this ambitious project is estimated to be approximately 9.7 million square feet.
The positive news regarding these orders likely contributed to the green trading of Larsen & Toubro’s shares on that day.In addition to securing the order for the residential township project in Bengaluru, Larsen & Toubro’s Buildings & Factories business has achieved significant milestones in other projects as well. They have received orders from a reputable developer to construct commercial towers in Hyderabad.
The scope of work for this project includes the construction of two buildings with specific configurations: one with 2 basements, ground floor, 6 podiums, 1 transfer floor, and 15 floors, and the other with 3 basements, lower ground, upper ground, 4 podiums, 1 transfer floor, and 14 floors. These towers will collectively have a built-up area of 4.2 million square feet.
Furthermore, the business has secured an order from the Indian Institute of Technology, Kanpur. This project entails the construction of a Super Specialty Hospital with 500 beds, featuring a ground floor and 5 additional floors, as well as an Academic Block with a similar configuration. These facilities will be integral components of the Gangwal School of Medical Sciences and Technology at IIT Kanpur. These developments underline L&T’s continued success and expertise in construction across various sectors.
Foreign broking house CLSA has expressed confidence in Larsen & Toubro (L&T) by maintaining a “buy” rating on the stock and increasing the target price to Rs 3,600 per share. This positive outlook is supported by recent developments as L&T has continued to secure significant orders, accumulating an additional $1.5 billion in orders for Mumbai infrastructure projects over the past seven days.
CLSA’s analysis suggests that L&T is well on track to achieve 50 percent of its guidance for FY24 inflow in the first half of the fiscal year. This indicates strong performance and growth potential for the company.
In addition to the buy rating and increased target price, CLSA has raised its estimates for L&T’s Engineering & Construction (E&C) segment. Specifically, CLSA has boosted its earnings-per-share (EPS) estimates for CY25-26 by 4-5 percent, driven by a 5 percent increase in the forecast for CY24 inflow. These adjustments reflect CLSA’s confidence in L&T’s future prospects and its continued ability to secure significant contracts in the engineering and construction sector.
On October 4th, Larsen & Toubro’s power business arm made a significant announcement regarding its latest achievement. The company successfully secured a substantial order worth up to Rs 2,500 crore from the West Bengal Power Development Corporation Limited, demonstrating its prowess in the power sector.
This Engineering, Procurement, and Construction (EPC) contract is particularly noteworthy as it revolves around the implementation of wet Flue Gas Desulphurisation (FGD) systems for a Thermal Power Plant situated in Sagardighi, West Bengal. FGD systems are instrumental in mitigating emissions and curbing the environmental impact associated with thermal power generation. They are designed to remove harmful sulfur dioxide (SO2) emissions from the flue gases produced during the combustion of fossil fuels. By capturing and treating these emissions, FGD systems contribute significantly to reducing air pollution and enhancing environmental compliance.
L&T’s ability to secure and execute such a substantial order underscores the company’s continued presence and expertise in the power sector. Their commitment to environmental stewardship, particularly in the realm of pollution control solutions, is evident through projects like this. This order not only serves as a testament to L&T’s capabilities but also highlights their dedication to sustainable and responsible practices in the power industry, aligning with global efforts to reduce the environmental footprint of energy production.
