L&T gains 3% as realty arm signs 3 projects worth $1 billion in MMR

L&T Realty has entered into a binding agreement to jointly develop projects in South Mumbai, Western Suburbs and Thane worth Rs 8,000 crore, with development potential of 4.4 million square feet.

Shares of Larsen & Toubro (L&T) were up 3 per cent to Rs 1,734 on the BSE in Monday's intra-day trade after the company announced that its realty arm has signed three projects worth $1 billion in the Mumbai Metropolitan Region (MMR). With today's gain, the stock of the engineering, designing & construction company has rallied 18 per cent in the past one month. In comparison, the S&P BSE Sensex was up 6 per cent during the same period.

"L&T Realty, the realty arm of L&T, has entered into a binding agreement to jointly develop projects in South Mumbai, Western Suburbs and Thane worth Rs 8,000 crore ($1 billion), with development potential of 4.4 million square feet. This is a part of company's larger plan to strengthen its footprint in major metros by adding around 5 million sq. ft. per year over the next five years," L&T said in a press release.

L&T Realty has an extensive portfolio spanning 70 million square feet across Residential, Commercial and Retail developments and is currently present in Mumbai, Navi Mumbai, Bengaluru, Chennai, and to some extent in NCR and Hyderabad.

Meanwhile, in April-June quarter (Q1FY23), L&T announced EPC orders in the range of around Rs 7,000-15,000 crore across railway, hydrocarbon, power T&D, water treatment, heavy engineering, buildings & factories segments.

L&T has conservatively guided that the group revenue and order inflows could grow 12-15 per cent in FY23, and its core business margin would come at 9.5 per cent. It has laid out a strategic plan for FY21-26 (Lakshya 2026), where the initiatives, investments and focus would help 11-13 per cent CAGRs in domestic revenue and order inflows.

"The order pipeline remains robust across T&D, green energy corridor, data centres, railways, transportation, water and infrastructure, etc. Key risks remain project delays/deferrals, lower conversion rate," analysts at ICICI Securities said in a capital goods & power sector report.

The brokerage firm expects decent execution pick-up YoY for L&T. "In our view, working capital and cash flow management will be key monitorable. Consequently, we expect adjusted standalone (including hydrocarbon) revenue to grow 57 per cent to Rs 20,587 crore. EBITDA is expected to grow 54.5 per cent to Rs 1,585 crore with margins expected to flattish 7.7 per cent owing to better execution and adjusted PAT (ex-E&A) expected to grow 54.5 per cent to Rs 1,159 crore partly aided by lower interest expense and lower tax," the brokerage firm said in a Q1 result preview note.