L&T Stock Update: Partnerships, Management changes, Brokerage Outlook & More

L&T update

L&T sold shares of Virescent Renewable Energy Trust. It also appointed Pramit Jhaveri as an independent director and collaborated with VI for the 5G use case. Let us look at all the developments in detail with the brokerage target price.

Virescent Renewable Energy Trust's share sell

  • L&T has sold 20 lakh shares of Virescent Renewable Energy Trust for Rs 19 crore at an average price of Rs 95.
  • Virescent Renewable Energy Trust is an infrastructure investment trust (InvIT) established as a trust under the Indian Trusts Act.
  • Its portfolio includes 500 MWp of solar assets located in Gujarat, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, and Uttar Pradesh.

Appointment of a new independent director

  • L&T appointed former Chief Executive Officer of Citibank India Pramit Jhaveri as an independent director for a period of five years with effect from April 1, 2022.
  • He served as CEO of Citibank from 2010 to 2019.
  • He is also a senior advisor to Premji Invest and PJT Partners and an independent director on the board of Bajaj Finance Limited.

Partnership with Vi

  • L&T Smart World & Communication and Vodafone Idea (Vi) to establish a private LTE enterprise network in India.
  • The companies have partnered to use 5G use cases in areas of public safety, smart and connected health as part of the government's 5G trials.
  • They will test and validate 5G use cases built on IoT, video AI technologies as L&T believes that the Industry 4.0 manufacturing revolution across the world has been brought about using hi-tech IoT and connected devices.

Focus on Digital Ecosystem

  • L&T Technology Services (LTTS), the pure play engineering services unit of the L&T Group is betting big on Meta.
  • The company’s focus as the ecosystem has started to evolve around digital discourse.
  • The company is setting up a Centre of Excellence for Metaverse as well as creating a business unit for Meta.
  • It bets on six big tech things: electric autonomous connected vehicles (EAVC), 5G, medtech, AI & digital products and digital manufacturing.

Brokerage Radar

JP Morgan - The brokerage firm has maintained an OVERWEIGHT rating with a target price of Rs 2100. The firm mentioned in its recent report that the higher oil is expected to impact growth. L&T has little exposure to roads and central spending. It looks forward to heightened spending on hydrocarbons. L&T has underperformed by 7% YTD and the USD is expected to be a miss on inflows. Order pickup is key to overshadowing margin in the near term.

Jefferies - Jefferies has maintained a BUY call but has slashed its target price to Rs 2,525 from Rs 2,675. The brokerage firm has lowered its EPS estimates for FY 22-25 by 4-8% for the company. It said Rs 41,200 crore worth of orders is needed more to meet the lower end of FY22 guidance. It expects that order flow to move 15% CAGR in FY21-24 vs 10% in the last 10 years.

The stock rose 1% on Friday to end at Rs 1,786.2.