Global brokerage firm Morgan Stanley has assigned an ‘overweight’ rating to Larsen & Toubro (L&T), setting a target price of Rs 4,106 per share. This target suggests a potential upside of 12 percent from the current level. The rating comes following L&T’s recent success in securing two lucrative defense contracts valued at Rs 13,370 crore.
Over the past month, the stock of this capital goods major has surged by over 8 percent, outperforming the Sensex, which recorded a gain of 2 percent during the same period. On January 30, the stock reached a 52-week high of Rs 3,738.
L&T Secures Significant Contracts from Defence Ministry:
- Supply of High Power Radars to Indian Air Force: L&T has been awarded a major contract by the defence ministry to provide high power radars to the Indian Air Force. These radars serve as static sensors for long-range aerial surveillance, boasting higher uptime.
- Indigenously Developed Close-In Weapon Systems (CIWS) for IAF: Additionally, the company has won an order for the supply of Close-In Weapon Systems (CIWS) developed domestically to the Indian Air Force. These CIWS will be strategically deployed at various locations across India to safeguard critical assets from low-flying, low-signature aerial threats, including unmanned aerial vehicles.
According to Morgan Stanley analysts, the commissioning of the first hydrogen electrolyzer is poised to significantly enhance L&T’s green offerings. “The CIWS order has already been factored into Q3, while the high-performance radar order is a new development,” stated the brokerage firm in its recent note.
In addition, analysts at CLSA reiterated a “buy” rating on L&T with a target price of Rs 4,360 per share. They emphasized that the company’s order inflow is anticipated to surpass estimates. “The order inflow exceeded expectations following the CCS approval of large defense orders last week. We anticipate an improvement in the company’s margins from Q4FY24, attributed to lower legacy orders in its backlog,” the brokerage firm highlighted.
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