Larsen -; Toubro Q3FY22 Preview: Revenue seen at Rs397 billion, PAT at Rs23.2 billion

28 Jan 2022 , 12:24 PM

Result date: 28th January, 2022

Recommendation: Buy

Target price: Rs. 2,436

Larsen & Toubro (L&T)’s revenue growth would be led by traction in the power, infrastructure and HC segments. NGT ban on construction in NCR could impact execution in this segment.

The company’s EBIT margins could gain from improving profitability of the infrastructure segment, though sharp decline in margins of HC segments is likely to offset these gains.

Likewise, lower other income could weigh on L&T’s PAT and reduce the positives arising from declining interest expenses, lower losses from Hyderabad metro.

Inflows are likely to remain flattish following delay in government orders, high base effect of Q3FY21. Order pipeline remains strong, led by healthy inflows in the Building & Factories and Water segments.

Important management insights to watch out for

• Order inflows and pipeline
• Restructuring of Hyderabad Metro projects
• Divestment of assets

Rs. Billion	December 2021 estimates	YoY change	QoQ change
Revenue	397	12%	14%
OPM (%)	12.0	-6 bps	48 bps
PAT	23.2	(6%)	35%
Inflows (ex-serv.)	318	(49%)	6%
Order book	3,355	1%	2%

Source: Company, IIFL Research