India's L&T surges as Q2 results defy market "skepticism"
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Shares of India's Larsen & Toubro surged nearly 7% on Thursday, set for their best session in over three years, after the infrastructure developer surprised the market with strong execution in a seasonally weak quarter and kept its forecast.
L&T is considered a bellwether for India's infra spending due to the scale of orders it receives, but its international business helped it to a bigger second-quarter profit and gave it confidence that orders would grow by 10% this fiscal year.
The India business has experienced a slowdown since the general elections that ran from mid-April through June, when major projects were put on hold.
"Going into the (Q2) print there was skepticism," Morgan Stanley said in a note. But the results ticked "all boxes".
Bernstein analysts said, "We were expecting the worst."
L&T's shares were last up 7% at 3,648 rupees. They were the second-biggest percentage gainer on the blue-chip Nifty 50 index, which was down 0.4%.
At least five of the 30 analysts covering the stock raised their rating, while at least eight raised their price targets, according to LSEG data.
L&T's international business contributed 52% of total second-quarter revenue, rising from a 43% share a year earlier and overtaking the dominant domestic business.
"The international hedge is working," said Bernstein, while CLSA said L&T is "not a hostage" to India's growth softness.
L&T's total order inflow fell 10% on-year in the quarter, mainly due to a high base a year ago, when orders jumped 72%.
Bernstein said the decline was not surprising.
