L&T Shares: The Quiet Outperformer Beating Nifty for Five Years Running
Jefferies has issued a target price hike for Larsen & Toubro Ltd., calling the stock a ‘quiet outperformer’ due to its superior performance against the Nifty index over a period of one to five years. The brokerage firm maintained a ‘buy’ rating on the counter while hiking the target price from Rs 4,230 to Rs 4,345, reiterating its confidence on the company’s order book trajectory and growth in the near future.
Outperforming the Nifty Index
According to the note, L&T has outperformed the Nifty index over the last six months, one-year and five-year periods by a margin between 1-201%. This is a significant achievement, considering the volatility of the Indian stock market in recent years. To learn more about the Indian stock market trends, check out our detailed analysis.
Order Book Trajectory and Growth
The firm also believes that L&T is on track to achieve or even surpass its guidance for financial year 2026 for revenue, margin and order flow. Jefferies, in fact, projects 20% growth for L&T’s core Engineering & Construction (E&C) Ebitda, which accounts for a notable increase from 16% growth that was observed between FY15 and FY19. For more information on Engineering and Construction sector, visit our website.
Strong Order Book and Management Guidance
This is buoyed by the company’s strong order book and the management’s knack for historically giving conservative guidance. Jefferies did acknowledge L&T’s guidance for flat margins in FY25, but labelled it as a cautious move by the management. To understand the impact of management guidance on stock prices, read our expert analysis.
Domestic Order Inflows and Overseas Project Performance
The brokerage firm expects the company to continue receiving strong domestic order inflows, which usually attracts better margin yield. This, combined with a stable overseas project performance, may likely lead to an upward revision. For the latest updates on domestic order inflows and overseas project performance, follow our market news section.
Compelling Case for the Stock
Overall, Jefferies believes L&T’s strong order book, particularly in the oil and gas segment, coupled with a clear path to enhanced profitability, makes a compelling case for the stock. L&T currently trades at a relative strength index of 60, which suggests neutral market sentiment. To know more about relative strength index and market sentiment, check out our educational resources.
Analyst Price Targets and Recommendations
Twenty eight out of the 34 analysts tracking L&T have a ‘buy’ rating on the stock, four recommend a ‘hold’ and two suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets is Rs 4,089, which implies a potential upside of 7%. For the latest analyst price targets and recommendations, visit our website.
Conclusion
In conclusion, L&T’s superior performance against the Nifty index, strong order book trajectory, and growth prospects make it an attractive investment opportunity for Indian investors. With Jefferies maintaining a ‘buy’ rating and hiking the target price, it’s essential for investors to keep a close eye on the stock’s performance. To stay updated with the latest Indian stock market news and updates, follow our blog.
