InvestorQ : What is the reason for the sharp rally in L&T in recent few days?
Juvina Maggie made post

What is the reason for the sharp rally in L&T in recent few days?

Deepa Salunkhe answered.
2 years ago

Larsen & Toubro has bene one of the big gainers in the recent couple of weeks. In fact, the stock rallied for the seventh straight session on Friday. In the last couple of weeks, the stock despite its size and heft has gained up to 15% to touch a level of Rs.1217 per share. In fact, L&T has outperformed the Nifty by gaining 15% in a short span of time.

The optimism is largely on the back of robust order flows. Recently, L&T received order for supply of 90 units of Komatsu Mining Equipment from Coal India subsidiaries. The orders have also come from customers in the coal sector, cement and iron ore sectors too. But orders were flowing in on all fronts.

Last month, the company received a chain of orders under its various business segments. For example, the construction and mining equipment business bagged one of its biggest orders to supply 46 units of Komatsu mining equipment to Tata Steel. In addition, the transport division also secured orders from National High-Speed Rail Corporation.

While the bullet train has been showering orders, L&T has also secured a large contract to construct India's longest road bridge across river Brahmaputra which will connect Dhubri in Assam to Phulbari in Meghalaya. The total orders in the pipeline are at record levels of Rs.600,000 crore with nearly 25% accounted for by international orders.

During the pandemic the company had bene constrained by logistical and labour related problems. That now appears to be history. That could lead to sustained improvement in L&T's H2 and FY22 revenue and margin performance. L&T has also benefited from the trickle-down effect of the government's liquidity enhancement measures.