Last updated: 23 Jul, 2020 | 10:35 am
Q1 results for L&T were expected to be muted, with the infrastructure sector getting hit hard by the nationwide lockdown. If not for the one-time gain of Rs 224.7 crore from the sale of its wealth management business and a deferred tax reversal of Rs 307 crore, the company would have reported a loss in this quarter. It will take a quarter or two for the infrastructure segment to pick up as the economy opens up and the supply of labours comes back to normal levels. As capex of PSU companies will come down to reallocate money to the social sector the demand from them might stay muted unless the government steps up the capex plans.L&T has a diversified business portfolio, a robust Balance sheet and strong order book position which will help them sail through the crisis. However, an eye needs to be kept on the pace of order execution in the near future as labour availability is at a very low level currently.
Our proprietary VGQM model has a HOLD rating on the stock.