Which Signals From L&T’s Q2 Point To A Continuing Infra Upswing?
About L&T: Larsen & Toubro is India’s largest engineering and construction conglomerate with strong exposure to infrastructure, energy, and hi-tech project execution. Recent quarterly results have highlighted strengthening order inflows and a stable margin profile, prompting mixed-but-constructive broker responses.
Brokerage Snapshot (Quick View)
| Broker | View | Target / Key Notes |
|---|---|---|
| Morgan Stanley | Overweight | TP ₹4,090. Core revenue +10% YoY; order inflows +54% YoY; energy orders +392% YoY. |
| Goldman Sachs | Neutral | TP ₹3,740 (from ₹3,540). Notes strong order visibility but flags slower execution and energy-margin pressure. |
Why Brokerages Are Watching Order Inflows Closely
Both firms point to robust orderbook growth as the dominant positive. Morgan Stanley highlights a sharp jump in order inflows that should sustain revenue growth over the next 12–18 months. Goldman Sachs acknowledges order strength but is cautious on execution timelines and energy segment margin volatility.
Financial & Operational Highlights
- Revenue growth: Core revenue reported ~+10% YoY — below some street estimates but supported by new order execution.
- EBITDA margin: Improved YoY (+12%), though energy vertical margins remain a point of focus.
- Order inflow spike: +54% YoY overall with energy orders surging ~392% YoY — underpins forward visibility.
- Order book: Expanded to multi-year visibility, providing runway for medium-term revenue growth.
Table — Key Metrics
| Metric | Latest | YoY / Note |
|---|---|---|
| Core Revenue | ₹ (reported) | +10% YoY |
| EBITDA Growth | (reported) | +12% YoY |
| Order Inflows | (reported) | +54% YoY (energy +392%) |
SWOT Summary
- Strength: Deep project execution capability and strong orderbook growth.
- Weakness: Execution risk and slower conversion on some large orders.
- Opportunity: Energy order pipeline and hi-tech projects provide margin expansion potential.
- Threat: Commodity price swings and execution delays could compress near-term margins.
Valuation & Broker Divergence
Morgan Stanley’s higher TP reflects a conviction that the order inflow acceleration will translate to superior revenue and margin recovery. Goldman Sachs’ more cautious stance reflects execution risks and the need for margin proof in energy projects. For investors, the divergence highlights a trade-off between near-term execution visibility and medium-term structural demand.
Investment Verdict
Brokerage consensus is constructive but nuanced: L&T’s strong order visibility argues for a medium-term overweight stance, but investors should watch execution cadence and energy-segment margins closely. Those seeking exposure to India infra can add selectively on confirmed order conversions and margin improvement, while risk-averse investors may await clearer execution updates.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes L&T remains a high-quality play on India’s infra cycle. Monitor orderbook conversion metrics, margin trends in energy, and quarterly execution beats as the key triggers for re-rating.
Discover more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on L&T
- How quickly will order inflows convert into revenue for L&T?
- What margin improvement is expected from the energy vertical?
- Which broker gives the most aggressive target and why?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
