On Thursday, BofA Securities revised its price target for Larsen & Toubro Ltd. (LT:IN) (OTC: LTOUF) stock, setting it at INR4,043, down from the previous INR4,158. Despite the reduction, the firm maintains a Buy rating on the stock.
This move reflects the company's financial performance in the first quarter, which saw a 15% year-over-year increase in revenue, matching BofA and street estimates due to strong execution.
Larsen & Toubro's order inflows, excluding services, reached INR 544 billion, surpassing BofA's estimates by two-fold and exceeding street expectations. This surge was attributed to a strong flow of international orders and a slight uptick in domestic orders, which countered the anticipated decline. The company's operational profit aligned with street forecasts, but the recurring profit after tax (PAT) fell short due to lower other income.
The report also highlighted several positive aspects of Larsen & Toubro's performance. The improvement in infrastructure margins and the maintenance of working capital at reasonable levels, which stood at 13.7% of revenue, were noted as strengths.
Additionally, Larsen & Toubro received an upgrade in its MSCI ESG rating, moving from BBB to BB. This upgrade was a result of the company's advancements in environmental and safety protocol standards.
The adjustment in the price target by BofA Securities comes after an assessment of both the company's quarterly achievements and its potential for future growth. The Buy rating indicates the firm's continuing confidence in the stock's performance despite the minor adjustment to the price target.
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