Target: ₹2,600
CMP: ₹2,157.70
L&T, the engineering conglomerate, by virtue of its leadership and commendable execution track record in the engineering, procurement, and construction (EPC) domain is well poised to benefit from capex upcycle in both public and private sectors.
For FY2023, the company would most likely exceed its order intake guidance and would easily achieve the upper end of its revenue growth guidance (12-15 per cent), given its robust order book of ₹3.9-lakh crore. Despite weak guidance for the core business margin in FY2023, we see multiple margin tailwinds in the medium to long term in the form of new orders secured at higher margins, declining commodity prices, increasing cost efficiencies, and easing supply chains.
The company has chalked out a detailed five-year strategic plan ‘Lakshya 2026’ for pursuing profitable growth in its traditional businesses of EPC projects and manufacturing and expanding the size and scale of its IT&TS portfolio.
Apart from strong growth visibility in its existing business, new avenues such as green hydrogen, data centers, and e-commerce businesses would contribute to its long-term growth. In addition, the unlocking of investments in Hyderabad metro and Nabha Power is being pursued and successful monetisation of the same should improve its working capital and debt profile.