Larsen & Toubro (L&T) Shares Surge Over 68% in 2023 – Will the Rally Continue in 2024?

Sujeet Kushwaha

Larsen & Toubro (L&T) shares have seen massive growth in 2023, surged over 68% amid an improving economic outlook and government’s infrastructure push. As we step into 2024, will this infra giant continue its dream run? Let’s take a closer look.

L&T Poised to Benefit from Capex Revival

L&T is strongly positioned to benefit from the investment cycle and capex revival theme in 2024 and beyond. Here’s why:

Preferred E&C Player for Large Complex Projects

L&T enjoys a preferred E&C player status in India, given its proven capability to handle large, complex infrastructure projects across sectors. Its strong execution track record makes it the partner of choice for mega government projects.

Streamlining Operations to Improve Efficiency

Recent measures by L&T like monetizing non-core assets, improving working capital cycle and reducing capex have led to a leaner and more efficient organization. This will reflect in better profitability and cash flows in coming years.

Core Infrastructure Focus Aligns with Government Spending

With the government continuing its huge infrastructure push in 2024 with projects like NIP and Bharatmala, L&T’s core competencies align perfectly to capitalize on this multi-year opportunity.

Growth Drivers – Infrastructure, Hydrocarbon and Technology Services

L&T has a presence across high-growth sectors, making its growth outlook very promising for 2024 and beyond:

1. Robust Infrastructure Pipeline

With the government targeting over Rs 100 lakh crore investment in infra over next 5 years, L&T is slated to see massive order inflows and revenue growth in its core infra business in 2024 and beyond.

2. Investment in Oil & Gas Sector

Major capacity expansion is planned in refining and petrochemical – sectors where L&T’s Hydrocarbon business has great exposure. This will ensure steady growth for the segment.

3. Booming Technology Services

L&T’s technology services arms – LTI Mindtree and LTTS are operating in high growth domains of digital transformation, IoT, 5G etc. Their order book and margins will continue expansion amid strong demand.

What Analysts are Saying About L&T Stock

Antique Stock Broking has a bullish view on L&T with a target price of Rs 4,214, an upside of over 19% from current levels. The positive outlook is centered around:

  • Strong infrastructure growth momentum
  • Pick up in private capex driving engineering services
  • Technology services arms firing on all cylinders

With economy poised for sustained growth and L&T’s well-diversified business model, the stage seems set for the stock to continue its dream run in 2024 as well.

Conclusion – Core Strengths Make L&T a Long-term Winner

L&T’s growing order book across sectors, efforts to enhance operational efficiency and parent company support make it a fundamentally strong organization for long-term growth.

Backed by a recovery in economy and pickup in investment cycle, Larsen & Toubro seems poised for a strong earnings growth trajectory over the next 3-5 years.

Its stock looks well placed to continue its surge into 2024, making it a good fundamental pick for the long run.

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Leveraging his government experience, Sujeet brings valuable insight on the stock market to readers. His passion for analysis drives coverage of equities and the latest financial news. When he's not busy dissecting stocks, Sujeet enjoys learning about new businesses and industries.
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