Q3FY21 Result Update - Larsen & Toubro - ICICI Direct

L&T's adjusted standalone revenues (ex-E&A business) for the quarter de-grew 1.3% YoY to Rs. 19619.8 crore vs. our estimate of Rs. 19984.8 crore. On standalone basis, infrastructure segment revenue (contributing ~77%) fell 7.9% to Rs. 15106.8 crore YoY due to job mix and site productivity though execution improved sequentially due to higher work force mobilisation and supply chain normalisation. On a consolidated basis, adjusted revenues from continuing operations fell 1.8% to Rs. 35596.3 crore YoY. During the quarter, standalone EBITDA margins improved 210 bps to 9.5% (vs. our estimates of 8.0%) on a YoY basis led by control on operating expenses, job mix and better performance in others segments. On a consolidated basis, EBITDA margins came in at 10.5% (vs. 11.1% in Q3FY20).

Valuation & Outlook

L&T reported strong order inflows while execution is seeing traction amid higher work force mobilisation and supply chain normalisation that could improve over next few months. Also, improved collections would further help improve working capital situation while cash proceeds from E&A have provided much needed liquidity comfort and ability to repay debt further strengthening the balance sheet. We expect it to deliver standalone revenue CAGR of 13.7%, EBITDA CAGR of 13.4% and PAT CAGR of 14.6% in FY21-23E. We value L&T on SoTP (base business at 20x FY23E EPS of Rs. 49.5) basis with a target price of Rs. 1640 (earlier TP of Rs. 1045). We change our rating from HOLD to BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_LarsenToubro_Q3FY21.pdf

Shares of LARSEN & TOUBRO LTD. was last trading in BSE at Rs.1359.75 as compared to the previous close of Rs. 1361.45. The total number of shares traded during the day was 414813 in over 24493 trades.

The stock hit an intraday high of Rs. 1392.8 and intraday low of 1331.1. The net turnover during the day was Rs. 565091979.

Source : Equity Bulls

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