L&T riding infra wave likely to extend its record run into 2024
stock extended its winning streak to hit a lifetime high of ₹3,347.55 on Monday before closing nearly 4% higher at ₹3,313.55.
Analysts said despite the recent record-breaking run, there is still room for more upside in 2024 spurred by the ongoing momentum of infrastructure building in India.
L&T, which is dubbed as a proxy for capital expenditure spending in India, will benefit from a likely continuity in the government. «From an economic standpoint, this lessens the risk of a populist turn and bodes well for continued government capex,» Nuvama Institutional Equities said in a note.
Shares of L&T have already surged close to 60% and are among the top gainers on the Nifty 50 so far in 2023 helped by its first-ever share buyback, strong order inflows, and stable operating performance.
This comes on the back of 10% gains in 2022, and more than 47% gains in 2021.
Gains in 2024 will make it the fourth consecutive year of ending in the green for the company's shares.
«The way the company has managed its cash flows and working capital to strengthen its balance sheet is commendable, and it will definitely command a premium for that with likely re-rating of (PE) multiples,» said Amit Anwani, analyst at Prabhudas Lilladher.
Even though a lot of positives for the company have been factored into its share price, Anwani sees gains coming in from an improvement in profitability and losses narrowing in non-core assets.
«L&T is likely to cross 20% growth in its order inflows, and margins which were impacted by commodity inflation will also gradually pick up,» he said.
The engineering major has seen a 65% growth in its order inflows between April and September, and is now sitting on an order book of ₹4.5 trillion as on September
