Q2FY23 Preview: Larsen -; Toubro: Revenue seen at Rs400,351 million, PAT at Rs22,304 million

30 Oct 2022 , 09:01 AM

Result date: 31^st October, 2022
Recommendation: Buy
Target price: Rs2,158
(Source: IIFL Research)

Larsen & Toubro (L&T) secured orders worth ~Rs150 billion in Q2FY23. The company’s consolidated revenue could grow ~16% over the year-ago quarter reflecting the uptick seen in its core infrastructure business. L&T is a key beneficiary from improving government capex/initiatives.

L&T could clock in 19% year-on-year growth in its consolidated EBITDA during the quarter. Robust growth in order inflows, healthy pipeline in the infrastructure business and easing commodity prices could drive the company’s margins.

L&T is focused on enhancing overall liquidity management and has seen an improvement in net working capital. It is planning to make its subsidiaries self-sustainable.

L&T’s consolidated Profit After Tax or PAT could increase ~30% over the year-ago quarter, aided by lower interest costs.

Important management insights to watch out for:
·         Pickup in core E&C revenue billing
·         Working capital cycle, debt levels
·         Transition of price hikes
·         Ordering environment
·         Impact of rising global issues on export orders

Rs. Million	September 2022 estimates	QoQ change	YoY change
Revenue	400,351	12.40%	15.88%
EBITDA	47,319	17.95%	19.10%
Profit After Tax	22,304	31.07%	29.47%

Source: Brokerage Reports