Analysts raise L&T targets on stellar Q1, share buyback
earnings that saw its order book surpass ₹4 lakh crore for the first time ever. Separately, the company announced a special dividend and a ₹10,000 crore share buyback, prompting analysts to raise their price targets on the stock. Shares of the engineering and construction conglomerate touched a record high of ₹2,673.85 before closing at ₹2,652 on the NSE, up 3.56% from the previous close.
Analysts expect L&T to deliver another 17% returns from the current levels. CLSA, which expected L&T to have a 'solid' year at the start of 2023, was positively surprised by L&T's executive in core business as well as mega renewable energy orders from global clients. The foreign brokerage remains the most bullish on the stock with a price target of ₹3,080 per share.
After market hours on Tuesday, L&T posted a 46.5% year-on-year jump in consolidated net profit, aided by improved operational performance and higher other income. The company has also approved a share buyback of up to ₹10,000 crore at a price of up to ₹3,000 per share — which implied a 17% premium to Tuesday's closing price. The board also decided to give a special dividend of ₹6 per share.
US brokerage Jefferies said the buyback quantum shows the confidence of the company in future cash flow generation. Of the 40 analysts tracking L&T, 38 of them have a 'buy' rating on the stock, while one remains 'neutral' and one recommends 'sell', showed a Bloomberg poll of analysts. L&T was the top gainer among frontline stocks.
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