BENGALURU, July 26 (Reuters) - Shares of India's Larsen & Toubro (L&T) shares jumped 4.3% to a record high on Wednesday, a day after the engineering company posted strong quarterly results, helped by a robust order book, announced a share buyback and a special dividend.
L&T's results are often seen as a key indicator of capital expenditure in the Indian economy due to the diverse nature and scale of projects under the company's portfolio.
The company's stock hit a record high of 2,670 rupees and was the top gainer on the blue-chip Nifty 50 index.
That was after L&T reported a bigger-than-expected 46.5% rise in quarterly profit and approved a 100 billion rupees ($1.22 billion) share buyback along with a special dividend of 6 rupees per share.
L&T will buy back shares at 3,000 rupees each, a 17% premium to their close on Tuesday, and brokerage Jefferies said the buyback quantum showed L&T's confidence in its cash flow generation.
Another surprise was L%T's order pipeline worth 10 trillion rupees (about $122 billion) for the next nine months, which was 34% higher year-on-year and more than the 14% increase last quarter, CLSA analysts wrote in a note.
"While its core E&C (engineering & construction) margin declined, its actions to improve return ratios and capital return should soothe nerves. We believe its margin will improve in the third quarter," CLSA added.
The company margins fell due to legacy COVID projects and higher staff costs.
The average rating of the 36 analysts covering L&T is the equivalent of "buy", and their media price target for the stock is 2,724 rupees, according to Refinitiv data.
The stock was last trading 3.7% higher at 2,656 rupees.
Reporting by Kashish Tandon in Bengaluru; Editing by Savio D'Souza
Source: Reuters