1700% Dividend: Largecap EPC Bags Order Between Rs 1,000 To Rs 2,500 Crore In Kolkata; Analysts Bullish

Larsen and Toubro (L&T) Construction's buildings and factories vertical has clinched an order, announced on Friday, May 17. L&T, a renowned name in engineering and construction, defines orders falling in the range of Rs 1,000 crore to Rs 2,500 crore as 'significant', and this recent contract falls within this bracket.

The conglomerate disclosed that its health business unit has secured a contract from the Institute of Neurosciences Kolkata, earmarked for the construction of a medical college and hospital campus in Rajarhat, Kolkata. This project entails the design and construction of a multifaceted campus, encompassing a 605-bed hospital, student, nurse, intern, and resident hostels, and a medical college capable of accommodating 150 students annually. The total built-up area spans a colossal 1.21 million square feet, as confirmed by the company.

The contractual obligations will unfold in two distinct phases, spanned across 60 months. L&T's scope of work entails civil structures, MEP (Mechanical, Electrical, Plumbing), finishes, paramedical facilities, and external development works, including landscaping.

L&T Construction's buildings and factories vertical has also garnered additional orders from ongoing projects.

The engineering giant reported a commendable 10.3% surge in its net profit during the March quarter, amounting to Rs 4,396 crore compared to the previous year's Rs 3,987 crore. However, despite this positive trajectory, the company's margin guidance left some analysts underwhelmed, leading to at least four of them revising their price targets on the L&T stock.

Larsen & Toubro (L&T) has targets set for order wins and revenue growth. Despite concerns over margins, analysts remain largely optimistic about the company's prospects, with the majority maintaining a "buy" recommendation on its stock.

Looking ahead to the financial year 2025, L&T is eyeing a 10% increase in order wins compared to the previous fiscal year, along with a robust 15% growth in its topline. However, the company's margin guidance for FY25, pegged at 8.25%, has raised some eyebrows, falling short of analysts' estimates, which ranged from 9% to 9.5%.

While this discrepancy in margin expectations has prompted adjustments in price targets by some analysts, the sentiment towards L&T remains largely positive. Out of the 36 analysts covering L&T, 31 have retained their "buy" recommendation on the stock. Three analysts advocate a "hold" rating, while only two have issued a "sell" call.

Despite minor cuts, L&T shares continued to exhibit resilience, trading at Rs 3,443 per share with a marginal decline of 0.50% on the National Stock Exchange (NSE) as of 12:50 pm. Over the past year, the stock has delivered returns nearing 60%.

Larsen & Toubro declared an equity dividend of 1700.00% for the year ending March 2024, amounting to Rs 34 per share. With the current share price standing at Rs 3,450.35, this translates to a dividend yield of 0.99%. The company boasts a track record of consistent dividend payouts over the last five years.

Reflecting on its history of rewarding investors, Larsen & Toubro last announced a bonus issue in 2017 at a ratio of 1:2, signalling its proactive approach towards enhancing shareholder wealth. The share has been trading ex-bonus since July 13, 2017.