According to Citi Research estimates, there may be a good jump in the earnings of Larsen & Turbo (L&T) in the third quarter. The reason behind this growth is the process of receiving orders in large quantities and completing them on time.
The brokerage estimates that there could be a 14% year-on-year growth in earnings in the September-December quarter of FY24. The company is included in the top pick of brokerage.
Important points:
- Citi Research estimates that the company will continue to deliver strong execution in the P&M business in Q3 FY24.
- There will be an annual growth of 14% in the company’s income.
- There will be a jump in the P&M margin of the company in Q3, which will make margin recovery possible.
- L&T is well positioned to benefit from the strong Capex Cycle in India and the Middle East.
Increase in target price
The company is the brokerage’s top pick. Citi has increased the target price of L&T from Rs 3,547 to Rs 4,082. However, there may be some risk at the upper level of shares.
The brokerage has estimated order inflow in L&T’s plant and machinery business at over Rs 50,000 crore, which is a jump of 10% year-on-year. Margins are expected to improve in the third quarter, increasing hopes of recovery.
L&T has demonstrated strong deliverability in its plant and machinery business, as evidenced by the large orders it is receiving from India as well as the Middle East.
According to Bloomberg data, out of 36 analysts tracking the company, 33 have maintained a ‘BUY’ rating, while one has recommended ‘HOLD’. While two have suggested ‘SELL’.
