Stock's Impressive Climb
Larsen & Toubro's (L&T) stock demonstrated an impressive performance, with shares reaching a 10-month high on October 15th. This surge was influenced by
the assessment of Jefferies, a global brokerage firm, which revised its price target for L&T upwards. The shares witnessed a 2.6% increase on the NSE, closing at Rs 3,841.4, nearly achieving their all-time high of Rs 3,963.5. Year-to-date, L&T shares have shown a gain of 6.5%, reflecting positive market sentiment. Jefferies maintained a “buy” rating, and its revised price target is now Rs 4,345, up from the previous Rs 4,230. This reflects the confidence in L&T's performance and growth trajectory.
Middle East Contracts Secured
A significant factor contributing to L&T's positive performance is the substantial orders secured by its Power Transmission & Distribution (PT&D) division in the Middle East. These are classified as 'large' orders by the company, with a valuation between Rs 2,500 crore and Rs 5,000 crore. The company secured contracts to build new 132kV substations, alongside 380kV overhead transmission lines in Saudi Arabia, crucial for supporting renewable energy projects. Moreover, the awarded projects involve a 400kV super grid interconnection project linking the electricity networks of GCC member states. As part of this, L&T is set to design, procure, and construct a 400kV substation in the UAE, fostering a new interconnection with Oman.
Brokerage's Positive Outlook
Jefferies' optimistic assessment significantly influenced L&T's stock performance. The brokerage firm anticipates that L&T will meet or exceed its FY26 guidance for revenue, order inflows, and profit margins. They highlighted the robust growth visibility and the company's conservative guidance as supporting factors for additional stock upside. This positive outlook underscores the analysts' confidence in L&T’s future. The analysts suggest that the company is well-positioned for continued success. This positive sentiment from a renowned global brokerage firm further bolstered investor confidence, driving the share price upward.
Company's Business Overview
Larsen & Toubro is a $30 billion Indian multinational corporation, engaged in diverse sectors, including engineering, procurement, construction, hi-tech manufacturing, and services, operating across worldwide markets. The company’s diversified portfolio and global presence have positioned it for sustained growth. The recent contracts in the Middle East highlight L&T's capabilities in power infrastructure and its commitment to supporting regional development. This further strengthens L&T's global standing and reputation for handling large-scale, technically complex projects. The company's consistent performance across different business segments, combined with a strong order book, makes it an attractive investment.
