On Wednesday, the shares of Larsen & Toubro (L&T) rose nearly 4% to Rs 1,813.20 in intraday trade on BSE. The spike came after the engineering, design and construction industries reported a good set of figures for the quarter ending June 2022 (Q1FY23). The company’s strong order book of Rs 363,448 crore also points to a positive revenue outlook for the next few years.

In the first quarter of FY23, L&T secured orders worth Rs 41,805 crore at the group level, up 57% from the same period last year. Meanwhile, international orders for the quarter stood at Rs 17,842 crore or 43% of the total order inflow.

L&T reported a nearly 45% rise in consolidated net profit to Rs 1,702 crore in Q1FY23 from Rs 1,174 crore a year ago. However, net profit fell by 53% sequentially. During the quarter, the company’s consolidated operating income grew by 22.22% to Rs 35,853 crore, supported by improved construction activities and strong project execution.

The company expects earnings to grow in the coming years after announcing its “Lakshya 2026 Strategic Plan”. The plan demonstrates efficient and timely execution of large orders, value-adding measures, maintaining leadership and sustainably increasing shareholder returns.

The company is diversifying into new businesses in green energy and e-commerce platforms. Meanwhile, the company is also seeking exit options and limiting exposure to non-core businesses during the Lakshya 2026 strategic plan.

Analysts at HDFC Securities see the company’s Rs 3.6 trillion large order book and private capital spending as triggers for future growth. “We maintain a ‘buy’ stance over the counter given the large order book size and improving the health of the Hyderabad Metro project. However, we cut our SOTP-based target price to Rs 2,135 per share (22x core on March 24). earnings per share), mainly due to revisions in IT subsidiary valuations. Inflated raw material costs, supply chain bottlenecks, talent management and subdued private capex are key risks to the target price,” the brokerage said.

Nonetheless, analysts at ICICI Securities see the company on track to deliver guidance of 12-15% revenue and order inflow growth in FY23.

“Given the volatile commodity outlook, margin guidance has been fixed at 9.5%. Regarding the working capital-to-sales ratio, the company guided in the range of 20-22% in early FY23, but now the company is confident in the debtor cycle and normalization Low-end execution of the guidance given by the brokerage firm ICICI Securities added.

In addition to this, L&T will focus on emerging product portfolios over the next 5 years such as green EPC, electrolyser manufacturing, battery and battery manufacturing, data centres and platforms (Sufin & Edutech). The focus on monetizing assets is also expected to further strengthen the balance sheet and improve returns.