L&T gains 2%, stock up for the 2nd straight day on winning two large orders

Shares of Larsen & Toubro (L&T) moved higher by nearly 2 per cent to Rs 1,898 on the BSE in Wednesday’s intra-day trade after the company announced that its water & effluent treatment business received large contracts (ranging between Rs 2,500 and Rs 5,000 crore) from the State Water & Sanitation Mission (SWSM), Uttar Pradesh.

On Tuesday, the stock ended 0.43 per cent higher in an otherwise subdued market. The stock had hit a record high of Rs 1,983 on November 15, 2021.

“The Water & Effluent Treatment Business of L&T Construction has secured a repeat order from the State Water & Sanitation Mission (SWSM), Uttar Pradesh to implement rural water supply projects providing Functional House Tap Connections (FHTC) under the Jal Jeevan Mission,” L&T said in exchange filing.

Further, the Smart Water Infrastructure segment of the Water & Effluent Treatment Business has been awarded a contract for an integrated infrastructure project at Silvassa in the Union Territory of Dadra & Nagar Haveli and Daman at Diu by the Silvassa Smart City Limited, the company said.

On Tuesday, L&T Construction was awarded a large contract for its buildings & factories business by the Government of Odisha to construct clinical blocks & allied infrastructure for a state-of-the-art hospital in Cuttack. The duration of this EPC project is 30 months.

L&T has been outperforming the market in past one year. In the past one week, L&T has gained nearly 4 per cent, as compared to a 1.1 per cent fall in the Sensex. Moreover, in the past three months, it has rallied 10 per cent as against a 1.2 per cent decline in the benchmark index. Further, over the past six months, the market price of L&T has rallied 25 per cent, as compared to a 10 per cent rise in the Sensex. In past one year, it surged 52 per cent, against 25 per cent gain in the benchmark index.

Overall, L&T has won orders worth Rs 68,700 crore for H1FY22. Further, continued momentum to win large/mega complex orders/ projects would substantially improve L&T’s order intake for FY22E despite a challenging environment. This will further strengthen its order book and enhance its revenue visibility in the medium term. We expect standalone revenue, EBITDA CAGR of 12.1 per cent, 12 per cent, respectively, in FY21-23E, ICICI Securities said in a note.

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