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HomeMarket NewsL&T shares fall after second price target cut in two days due to West Asia crisis
L&T's order book exposure to West Asia is 37% and it is 33% to order inflows in the first nine months of the ongoing fiscal, as per brokerage firm JM Financial.
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Shares of Larsen and Toubro (L&T) Ltd. declined nearly 3% on Thursday, March 12, after receiving their second target price cut in two days. The stock though, is looking to recover from the lows of the day.
Brokerage firm Kotak Institutional Equities has a 'buy' rating on the stock but has cut its price target to ₹4,000 per share from ₹4,350 earlier. The revised price target implies an upside of 4% from the stock's previous close. This comes after UBS, on Wednesday, cut its target price on L&T by nearly 8%.
L&T has been on investors and analysts' radar after the Iran-Israel-US war started on February 28 because it has significant exposure to West Asia.
Kotak said L&T will see the crisis in West Asia test its near-term financials on varied counts that may get partly shared with customers.
The direction of the medium-term impact of the war on spending in West Asia is difficult to assess at present, Kotak said.
Uncertainty on the pace of capex in the Middle East, coupled with the fall in Kotak Institutional Equities' Fair Value of its subsidiaries, does increase the dependence on value incremental investments to create compounding stock returns hereon, it added.
The requirement of scale of investments and / or return on incremental investments is material, Kotak said.
As much as ₹3.6 lakh crore or 49% of the company's consolidated order book was from its international business. Of this, over 80% came from Saudi Arabia, UAE and the gulf region.
L&T's order book exposure to West Asia is 37% and it is 33% to order inflows in the first nine months of the ongoing fiscal, as per brokerage firm JM Financial.
Of the 34 analysts who have coverage on the stock, 28 have a 'buy' rating, four have a 'hold' recommendation and two have a 'sell' rating.
L&T shares declined 2.6% to hit an intraday low of ₹3,736.5 apiece on Thursday. The stock was down 1.1% at ₹3,795.7 apiece around noon. It has declined 9.6% in the past month.
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