L&T stocks in focus as share buyback price revised to Rs 3,200 from Rs 3,000

Shares of Larsen & Toubro (L&T) will be in focus on Tuesday morning after its buyback committee revised the price for Rs 10,000 crore share buyback to Rs 3,200 from Rs 3,000 earlier "to realise this strategic objective and in consideration of the present market sentiments."

On the other hand, it reduced the number of shares proposed to be bought back to 3,12,50,000 shares from 3,33,33,333 shares earlier, representing 2.2 per cent of the total paid-up equity shares of the company against 2.37 per cent earlier.  

L&T said one of the key objectives of the company’s strategic plan, Lakshya ’26, is to enhance the return on equity (ROE) and thereby maximise shareholder value. Return on equity capital to the shareholders in the form of buyback of shares of the company is a step in that direction, it said in a BSE filing.

ICICI Securities last week upgraded the stock to 'BUY' on strong consecutive order inflow for two quarters (Q1, Q2FY24), which it said could likely result in beat to order inflow guidance for FY24. The domestic brokerage talked about a significant buyback to reward shareholders and consequent improvement in RoE and expected expect margin improvement for core business amid benign raw material prices. "We upgrade the stock to BUY with SOTP based target of Rs 3,141 (assigning 30x FY25E to EPC business)," it said.

L&T was in news recently amid reports of a $3.9 billion order from Saudi Aramco. Foreign brokerage CLSA said the biggest opportunity for L&T in rest of FY24 is Middle East (ME) hydrocarbon, which should address market concerns of slowdown in government orders in Q4FY24 ahead of elections.

"ME is transitioning well using gas as a transition fuel before renewables take over the long-term with Aramco launching $100 billion gas field at Jafurah. L&T guided for a bigger prospective pipeline for 9MFY24 versus the start of the year at $125 billion up 34 per cent YoY for its core E&C business led by a spike in GCC capex. L&T with its long standing in MENA and competency, is a one of the few preferred contractors of Aramco," CLSA said.

Orders, CLSA said, are likely to flow through with Aramco likely to order $10 billion worth orders for Jafurah, where L&T has emerged as a preferred bidder for orders worth $3.9 billion(17 per cent of FY24 inflows.

Till date in FY24, L&T has announced orders worth over Rs 75,000 crore. "With this significant accretion in orders, L&T could report over 20 per cent growth in order inflow in Q2 (excluding services), in our view," ICICI Securities said.

 

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