L&T Slashes Margin Guidance for FY25, Shares Fall By 5%

L&T is an Indian Multinational Company engaged in EPC projects, Hi-Tech Manufacturing and services, It is one of the largest companies in India with a market capitalisation of more than Rs.4.5 Lakh Crores, Yesterday the company reported its Q4 results which were in line with but the weak guidance from the management has shifted the market sentiments for the stock leading to a fall of 5% today.

Q4 Performance of L&T

L&T reported a 15% rise in Revenue from operations reported at Rs. Rs.67,078 crores against Rs.58,335.15 crores in Q4 FY 2022-23, Net profit after tax stood at Rs.5,003.54 crores, a rise of 12.5% as compared to  Rs.4,446.74 crores in Q4 FY 2022-23.

EBITDA for the quarter stood at Rs.7,243 crores against Rs.6,833 crores in Q4 FY 2022-23, a rise of 6% on a YoY basis, However, the EBITDA margins have contracted from 11.7% in the Q4 FY 2022-23 to 10.8% in Q4 FY 2023-24. The company has also announced a dividend of Rs.28 per share.

The order inflow of the company for Q4 FY 2023-24 stood at Rs.72,150 crores as compared to Rs.76,099 crores in Q4 FY 2022-23.

Weak margin guidance

The FY25 margin guidance has remained flattish, and the expectations of significant improvements in the margins are subdued, It is being said that the company has reduced its future margin guidance to 8.2% for FY25. This weak margin guidance has turned the markets unhappy, resulting in the stock being down by as much as 5% today, The stock currently trades at Rs.3,365 a piece, down by 3.4% from its previous day’s closing price. 

Stock Performance

L&T has been one of the top performers in the NIFTY 50 index with the stock giving more than 40% returns in the past year against 21.5% returns of NIFTY50, the stock currently trades at Rs.3,365 a piece, trading lower by -3.4% from its previous day closing price.

Conclusion: The lower margin guidance ahead has made the market unhappy, though the company has received inline numbers and the order book for the quarter also looks good in every segment of the business of company, Analysts are still positive about the stock but the lower margin guidance have prompted the streets to cut their target prices for the stock.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.