Top Mutual Funds
- 25 Jul 2024
- ICICI Securities
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L&T : ALL ROUND PERFORMANCE
LT - 3247 Change: 19.60 (0.61 %)News: L&T reported strong operational performance for Q1FY25 across all parameters. Given a seasonally weak quarter coupled with general election, the company managed to report Rs 71000 crore order inflows, up 8% YoY mainly led by international markets. The current backlog stands at Rs 490900 crore, up 19% YoY. Strong execution in the infrastructure segment (revenues up 22% YoY) and hydrocarbons (up 27% YoY) space led to consolidated revenue growing by 15% YoY at Rs 55100 crore. Consolidated EBIDTA margins came in at 10.2% flat YoY. Positive surprise also came in from the expansion of 40 bps margins in the core Project & manufacturing segment at 7.8%. In terms of business prospects, for 9MFY25E, the company has a bid pipeline of Rs 9.1 trillion which has declined 10% YoY on account of project deferrals/cancellation in the international hydrocarbon space. Despite this, the company is quite confident of meeting its 10% YoY inflow growth guidance. The company also retained its revenue growth and margin guidance for FY25E. The NWC ratio stood at 13.9% vs. 17% YoY and 12% QoQ. Consequently, PAT grew by 12% YoY despite 20% YoY decline in other income in Q1FY25.
Views: Securing order inflows near the guidance range in a tough quarter speaks of the diversity of the company’s operations. We believe given the backlog growth and pick up in execution in remaining 9MFY25, there remains a strong probability of a beat on the revenue growth guidance. With continued focus on improvement of overall return ratios and aspiration of 18% ROE by 2026 looks a realistic one. Hence, we believe L&T will remain our best capex play in large-cap capital goods space.
Impact: Positive