L&T cross Rs 4 lakh crore m-cap; analysts see more upside post $4 bn Saudi Aramco’s order win

Engineering group Larsen & Toubro’s market capitalization hit 9 after its share price rose after it won a contract for Saudi Aramco’s Jafra unconventional gas development project, which is believed to be worth nearly $4 billion. It surpassed 4 million rupees on the 7th of the month.
Other companies with a market capitalization over INR 40 lakh include Reliance Industries Ltd, TCS, HDFC Bank, Infosys, ICICI Bank, HUL, ITC, LIC, SBI, Bharti Airtel, Bajaj Finance, Adani Energy Solutions and Adani Green Energy. included. Adani Enterprises, Kotak Mahindra Bank and Adani Total Gas achieved this milestone. It hit a record high of Rs 2854.95 per share on 7th September.
Many brokers maintain positive valuations even while raising their price targets. Citi maintains its ‘Buy’ rating and raises its price target to Rs 3,175 from Rs 2,889.48, CLSA maintains its ‘Buy’ rating and raises its price target to Rs 3,240, while Morgan Stanley maintains its Overweight rating and target It raised its share price from Rs 2,889.48 to Rs 3,175. 2,935 yen per share. According to reports, L&T has been contracted to build a gas processing plant and its main process units as part of the Jafra unconventional gas production project and will build a gas compression unit.
Morgan Stanley said the order will account for 13% of its annual guidance (F24e growth of 10% to 12%) and 17% of core order flow. Potential upside risks to L&T include higher government spending, lower steel and other material costs, and faster economic growth leading to higher-than-expected private capital spending. Few analysts see the hydrocarbon sector in the Middle East as a key growth opportunity for L&T in FY24, helping to allay concerns about a possible slowdown in government orders ahead of the forthcoming 4Q24 elections. It will be.
“By the time orders are placed and earnings per share are achieved, we expect the stock to revalue. As such, we are increasing our E&C multiplier to 25x versus 24x,” CLSA said in its latest announcement.
L&T’s prospect list for the first quarter was $3.47 billion, with the majority of that prospect list (approximately 70%) in the Middle East region. Broker Citi observes that L&T has expanded its 2024 growth potential following first-quarter results, largely due to a rise in hydrocarbon outlook. In addition, L&T’s financial health has improved and at the parent company level he is profitable at Rs 250 crore, working capital has increased significantly and consolidated Return on Equity (RoE) continues to trend upwards. The announcement to repurchase up to Rs 1000 billion, equivalent to approximately 2.4% of the outstanding shares, at a maximum price of Rs 3,000 per share strengthens the company’s confidence in L&T. In its latest announcement, Citi said L&T remains the company’s first choice in the medium term.