Over the past 8 days L&T has reported Rs92.65B of new orders. Historically order inflow has been a key determinant of stock price performance. However on
consistent weak execution the stock gets punished (1QFY10-3QFY10). At the end of 4QFY10 management gave a guidance of 25% yoy growth in order flows which was reiterated in the Jun-10 quarter. The stock has outperformed the Sensex in the Jun-quarter by 10%.
Excluding potential captive orders (~Rs160B) and new orders reported in Jun-q (Rs156B), the implied run-rate required to meet order inflow guidance for FY11 (Rs870B, implying 25% YoY growth) is ~Rs185B [=(870-16—156)/3]. L&T has already met 50% of the order inflow run-rate required for Sep-q till now (5th
Aug)
