On Thursday, Goldman Sachs (NYSE:GS) maintained a Buy rating on Larsen & Toubro Ltd. (LT:IN) (OTC: LTOUF) stock and increased its price target to INR3,960.00, up from the previous INR3,740.00. The adjustment follows the company's latest financial performance, which showed a mixed set of outcomes.
Larsen & Toubro's core order inflow experienced a 14% decrease, which was attributed to a high base and was consistent across both domestic and international markets. Despite this decline, the company's revenues saw a significant 28% increase, and EBITDA margins improved slightly to 7.6%, marking a 20 basis points year-over-year gain.
The analyst noted that the company's prospect base for the second half of the year stands at Rs8.08 trillion, with 57% of it being domestic. To meet its 10% order inflow guidance, Larsen & Toubro would need to achieve an 18% win-rate. This is compared to the general sector expectation (GSE) of a 16.2% win-rate and a 4% year-over-year order inflow growth.
The report further highlights that for the first half of the year, revenue growth was primarily driven by international projects. In contrast, domestic order inflow and revenues were down 5% and remained flat year-over-year, respectively. However, the second half of the year is expected to show improvement in both ordering and execution due to a favorable base from the previous year's election-related slowdown.
The firm concluded its assessment by reiterating its Buy rating for Larsen & Toubro, with the revised price target of INR3,960, reflecting the company's potential to capitalize on the anticipated market developments in the coming months.
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