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Target: ₹2,050
CMP: ₹1,569.55
Larsen & Toubro (L&T) is a proxy play of India infra story with strong expertise and track record of delivering high-value orders. We expect the momentum to continue over the next couple of years led by multiple high-value orders including National Infrastructure Pipeline (NIP), Bharatmala, Sagarmala, bullet train and metro rail projects etc.
L&T is well-placed to benefit from several big-ticket projects, as it satisfies all basic requirements — balance-sheet size, strong track record, technical expertise and adequate liquidity to bid for such projects. L&T scouts for opportunities of ₹ 8.5 lakh crore during FY23.
Cash burns in Hyderabad metro project and higher input costs are seen as the key near-term overhangs.
For FY23, the management guided for 12-15 per cent growth in the group order inflows and revenue. Margins for Projects and Manufacturing business are expected to remain at about 9.5 per cent. However, given the volatility in EPC segment, the management guided for a NWC-sales ratio of 20-22 per cent in FY23.
Order inflow increased by 46 per cent year-on-year to ₹73,940 crore in Q4-FY22, while FY22 order inflow grew by 10 per cent to ₹ 1.93 lakh crore. The total order book as of FY22 stood at ₹ 3.56 lakh crore (+9.2 per cent). PLI scheme and “Atmanirbhar Bharat” will give a further boost to infrastructure development and domestic manufacturing.
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