Larsen & Toubro (L&T) saw a notable surge in its share price, climbing over 4% in early trading on Friday following the release of its impressive Q4 financial results. This uptick occurred in the context of a generally declining Indian stock market, affected by ongoing military tensions between India and Pakistan. At its peak, L&T shares reached ₹3,477.55 on the Bombay Stock Exchange (BSE), marking a significant performance amidst broader market challenges.
Robust Q4 Performance Boosts Investor Confidence
In its financial report for the fourth quarter of FY25, L&T unveiled a consolidated net profit of ₹5,497 crore, reflecting a robust 25% increase compared to ₹4,396 crore from the same period last year. This impressive growth was supported by an 11% rise in revenue from operations, which escalated to ₹74,392 crore from ₹67,079 crore year-on-year.
Key Highlights from Q4FY25
- EBITDA Growth: Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter rose by 13%, reaching ₹8,203 crore, up from ₹7,234 crore.
- Improved EBITDA Margin: The EBITDA margin also saw a positive shift, climbing 20 basis points to 11% from 10.8% year-on-year.
Order Inflows and Dividend Announcement
During the financial year ending March 31, 2025, L&T secured orders worth ₹356,631 crore, an 18% increase from the previous year. Notably, international orders totaled ₹207,478 crore, accounting for 58% of the overall order inflow. In Q4FY25 alone, order inflows reached ₹89,613 crore, marking a 24% increase year-over-year, with international orders comprising 70% of this figure, amounting to ₹62,739 crore.
In a positive development for its shareholders, L&T’s board has proposed a dividend of ₹34 per equity share for the financial year ended March 31, 2025, with the record date set for June 3, 2025.
Analyst Insights: Should You Invest in L&T?
Ashwani Sharma, a Senior Research Analyst at Emkay Global Financial Services Ltd., believes that L&T’s strong Q4 results demonstrate the company’s diverse engineering and manufacturing capabilities, along with its broad geographical exposure. However, he cautions that delays in execution and order inflow conversions due to geopolitical tensions could pose challenges in the near term.
- Earnings Projection: Sharma noted a projected 7-8% reduction in earnings for FY26/27, influenced by decreased EBITDA margins linked to the hydrocarbon sector and a growing fixed-price order backlog.
- Valuation Assessment: He pointed out that L&T is currently trading at a core P&M multiple of 25x/20x for FY26E/27E EPS, which presents an attractive risk-reward scenario considering a projected 23% CAGR in EPS over FY25-27E.
Despite a current multiple below the historical average of 23x, L&T continues to show promise compared to the broader industrial and infrastructure sectors, offering strong growth and returns.
Market Reaction
As of 9:35 AM, L&T shares were trading at ₹3,428.00, reflecting a 3.23% increase on the BSE. Analysts maintain a ‘Buy’ rating for L&T, although they have adjusted the target price down by 12% to ₹4,000 per share for March 2026, suggesting a strategic investment opportunity amid fluctuating market conditions.
With these strong fundamentals and market positioning, L&T stands out as a compelling choice for investors looking to navigate the complexities of the current economic landscape.
