Buy Larsen and Toubro: target of Rs 4450: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Order inflow growth: L&T reported its highest quarterly order inflow (ex-services) of INR 1.3trn (+32% YoY), with a strong pipeline of INR 10trn.
  • Execution and revenue growth: Core revenue grew 20% YoY, driven by green energy and conventional energy segments.
  • Margin recovery: Management expects core margins to recover in H2, with a guidance of 7.8% for the fiscal.
  • Working capital management: NWC/sales declined to a record low of 1.7%, supported by improved collections and customer advances.

Thesis Validation Checklist

To validate the thesis, watch for:

  • Order inflow growth: Meeting the guidance of 10-12% growth in order inflows.
  • Revenue growth: Achieving the guided revenue growth of 10-12%.
  • Margin expansion: Recovery in core margins to the guided 7.8% level.
  • Working capital management: Continued improvement in NWC/sales. These signals will indicate whether L&T's robust order inflows and execution are sustainable, and if the company can achieve its guided growth and margin expansion.