L&T powers up in March quarter but valuations need more mojo

Larsen and Toubro Ltd’s shares have been in a state of inertia for a year. A robust March quarter show has propelled the company ahead of its order flow and revenue guidance for the full year. Segment-wise break-up of revenue shows that the company’s core business, which is infrastructure, clocked a robust 15% growth from the year earlier. Further, while private sector capex is unlikely to revive in the near term, international trade conflicts amid high crude oil prices are risks to growth in international order flows as well. Apart from the large cash reserves the company is sitting on, analysts foresee more cash addition as the sale of its electrical and automation division gets regulatory approval over the next 12-18 months.