Rs 30/Share Dividend: L&T Shares To Trade Ex-Dividend This Week For 1500% Dividend Payout; Buy?

Larsen & Toubro (L&T) stock will be in focus during the trading week from July 31st to August 4th. The stock will trade ex-dividend on August 2nd for a dividend payout of a whopping 1500% including a special dividend. L&T posted a healthy quarter, surpassing estimates, owing to strong execution and better ordering activity. Brokerage LKP Securities expects L&T shares to rise by over 11% going forward. This makes L&T among good pick in high dividend-paying stocks.

The leading infra player has fixed August 2nd as the record date for a dividend of Rs 24 per share (1200%) and a special dividend of Rs 3 per share (300%) for the financial year FY23.

Together, L&T is set to pay a dividend of Rs 30 per share aggregating to 1500% for the fiscal FY23.

That means those investors who will hold L&T shares in their demat accounts by the end of August 2nd will be eligible for the dividend benefits.

This dividend payout is higher compared to the total dividend of 1100% aggregated to Rs 22 per share which was paid in FY22. In the fiscal FY21, L&T paid 900% dividend aggregating to Rs 18 per share.

Ahead of turning ex-dividend, L&T shares ended at Rs 2650.15 apiece, down by Rs 12.85 or 0.48% on BSE during Friday's trade. However, the stock ended the trading week from July 24th to 28th on a positive note with nearly 2% upside on the exchange. Apart from the dividend announcement, a strong Q1 quarter and buyback of Rs 10,000 crore also lifted the sentiment in the stock.

During the June 2023 quarter, the company's consolidated PAT rose by 46% YoY to Rs 2,493 crore, while revenue from operations climbed by 34% YoY to Rs 47,882 crore primarily aided by the execution of a healthy opening order book in its Projects and Manufacturing portfolio. International revenues in the quarter also jumped by 40% YoY to Rs 19,022 crore.

Also, L&T's board approved a buyback proposal worth Rs 10,000 crore for Rs 3,000 per equity share.

Should you buy L&T shares?

LKP Securities in its research note said, "Going forward, management has maintained its guidance for revenue growth of 12-15% for FY24, with order inflows growth at 10-12%. For Core E&C business, L&T has maintained its guidance guided for EBITDA margin of ~9%. NWC/sales will remain in the band of 16-18% backed by increase in GCC orders, timely payment and certification."

Further, the analysts of the brokerage added, "Given record OB with strong order pipeline and gradual revival in private capex provides healthy outlook ahead. We believe execution for Core E&C business should pick up meaningfully given the strong inflow and improving working capital cycle. Overall a robust order book, strong balance sheet, diversified business portfolio and proven execution capabilities gives L&T an edge in the current volatile and challenging economic environment."

The brokerage's note further said, "With a continued focus on selective order acquisition, efficient execution of large order book, foray into new businesses like electrolysers, green energy and its focus on improving its RoE, we believe L&T will continue to perform well in such challenging times. Further, L&T's 'Lakshya 2026 Plan' is focusing on scaling up new business opportunities which are now in the incubation phase and are expected to bring significant benefits in future."

LKP has tweaked FY24 to factor in strong order inflow, while FY25 estimates are largely unchanged. Hence maintained 'BUY' with a SOTP-based TP of ₹2,945. This would be over 11% potential upside in L&T ahead compared to the latest market price.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.