Larsen & Toubro Ltd., a diversified conglomerate with a broad range of interests including infrastructure, heavy engineering, defense engineering, power, hydrocarbon, hi-tech manufacturing, and services, has reported a significant year-on-year increase of 22% in its order backlog. As of today, the company's backlog stands at ₹450000 crore (INR100 crore = approx. USD12 million).
The company's robust project pipeline, valued at ₹8.8 trillion, is expected to ensure a 15% growth in order inflow for the fiscal year 2024. The services sector of the company, which contributes to 32% of the revenue, is also on an upward trajectory.
In an effort to enhance shareholder value, L&T has committed to strict balance sheet discipline and the monetization of non-core assets. The company has set ambitious targets for the future, aiming for an 18% return on equity by 2026. Through a Sum-of-the-Parts (SoTP) valuation method, it projects a fair value of ₹3560.
As a preferred large-cap capital goods pick and representative of India's capital expenditure narrative, the company anticipates a compound annual growth rate (CAGR) of 18.6% for its revenue over FY23-FY25E. In addition, it also projects a substantial increase in profit after tax (PAT) with a CAGR of 26.5% over the same period.
InvestingPro Insights
Drawing from real-time data and expert insights from InvestingPro, Larsen & Toubro Ltd. (LART) presents a promising investment opportunity.
InvestingPro data indicates that the company has a perfect Piotroski Score of 9, a metric that evaluates the financial health of a company, pointing to a strong financial position. Additionally, the company has been aggressively buying back shares, a move that often signals management's confidence in the company's future prospects.
InvestingPro Tips also highlight that the company has been consistently increasing earnings per share, a key indicator of financial performance. This aligns with the company's projected compound annual growth rate (CAGR) of 26.5% in profit after tax (PAT) over FY23-FY25E.
While the company is trading at a high P/E ratio relative to near-term earnings growth, it is also a prominent player in the Construction & Engineering industry and stockholders have been receiving high returns on book equity.
These are just a few of the tips available on InvestingPro. For a deeper dive into Larsen & Toubro Ltd. and more expert insights, consider exploring the additional 11 InvestingPro Tips available on the platform.
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