L&T hits 9-mth high ahead of Q2 nos; wins significant order in Saudi Arabia

Shares of Larsen & Toubro (L&T) edged 2 per cent up to hit a nine-month high of Rs 2,020.55 on the BSE in Monday’s intra-day trade after the engineering & construction company said it won significant orders for its power transmission & distribution business.

The company did not disclose the exact value of the orders. The significant value of the project is between Rs 1,000 crore to Rs 2,500 crore, as per L&T. The stock was trading at its highest level since January 20, 2022. It is trading close to its record high level of Rs 2,078, which it had hit on January 18, 2022.

Meanwhile, the board of directors of L&T is scheduled to meet today to consider and approve the unaudited financial results of the company for the quarter ended September 30, 2022 (Q2FY23).

L&T said in an exchange filing said that the power transmission & distribution business of the company has secured multiple EPC orders in the current quarter to build transmission lines and substations in the Kingdom of Saudi Arabia.

The business will undertake engineering, design, procurement and construction of more than 400KM of 380kV overhead transmission lines and a new 230kV gas insulated substation with associated automation and protection systems, the company said.

Including today’s orders, L&T has won a total of six ‘significant’ orders so far this month. On October 14, the company had said it secured repeat orders from the Narmada Water Resources, Water Supply & Kalpsar Department, Government of Gujarat, to execute pumping system and pipeline works from Tappar Dam to Nirona Dam (Northern Link). This is the single largest order secured by the business in Gujarat.

In the global market, L&T Heavy Engineering secured a key order for the supply of Reactors for renewable diesel production from a prestigious client in Singapore. The company has also secured repeat orders from the Water Resources Department, Government of Odisha to execute Cluster XIX & Cluster XX Mega Lift Irrigation Projects.

During the April-June quarter (Q2FY23), EPC order inflows announced by L&T were in the range of around Rs 7500-17500 crore (as on date, ex-services segment) across railway, hydrocarbon, power T&D, water treatment, heavy engineering, buildings & factories segments indicating decent order inflows for the quarter amid challenging environment.

ICICI Securities expects a decent pick-up in execution on a year-on-year (YoY) basis. According to the brokerage, working capital and cash flow management will be key monitorables.

For Q2FY23, the brokerage firm expects L&T’s adjusted standalone (including hydrocarbon) revenue to grow 10.2 per cent to Rs 23,206 crore. EBITDA is expected to grow 11.5 per cent to Rs 1,926 crore with margins expected to be at 8.3 per cent owing to better execution and adjusted PAT (ex-E&A) expected to grow 5.9 per cent to Rs 1,859 crore partly aided by lower interest expense and lower tax.