Buy Larsen and Toubro; target of Rs 1380: Motilal Oswal

110704 Investors following Larsen. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Larsen and Toubro; target of Rs 1380: Motilal Oswal

Motilal Oswal is bullish on Larsen and Toubro and has recommended buy rating on the stock with a target of Rs 1380 in its January 24, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Reduce Union Bank; target of Rs 210: Emkay Exide Industries an underperformer: LKP Motilal Oswal neutral on Cairn India ALSO READ See previous views by Motilal Oswal See what other Experts & Brokerages are saying about Larsen See messages about Larsen Larsen BSE | NSE 30/05/12 Are Mutual Funds betting on Larsen?

Motilal Oswal is bullish on Larsen and Toubro and has recommended buy rating on the stock with a target of Rs 1380 in its January 24, 2012 research report.

"Larsen and Toubro (L&T), reported revenue of INR140b (up 23% YoY) for 3QFY12, higher than our estimate of INR136b. EBITDA margin was 9.6%, down 125bp YoY, in line with our estimate of 9.8%. However, margins were impacted to extent of 280bp by forex loss of INR4b. Adjusting for this, EBITDA margin was 12.5%, up 170bp YoY. Net profit was INR9.9b (up 23% YoY), significantly above our estimate of INR8b, partly boosted by higher than expected other income. Adjusted for MTM forex loss of INR2b on overseas loans (total: INR4b), PAT growth was an impressive 40% YoY. Among the segments, E&C revenue grew 25% YoY while EBIT margin declined 36bp YoY (down 36bp QoQ as well). Margins were partly impacted by forex loss of INR4b."

"Order inflow grew 28% YoY to INR171b during quarter due to strong growth in the infrastructure sector. Order intake in the power sector declined 40% YoY, while infrastructure sector orders grew 39% YoY. The oil & gas segment witnessed healthy traction too. Order book stands at INR1,457b, up 27% YoY and 3% QoQ. BTB stands at 3x TTM revenue. Slow moving orders increased to 10-12% of the order book v/s 5-6% at the beginning of the year and 8-10% in 2QFY12. During the quarter, L&T included a gas-based power EPC (3x360MW order from PPN Power of Apollo Group), valued at INR14b, in the list of slow moving orders."

"L&T has maintained a healthy pace of growth despite a challenging environment and will be one of the best placed companies to capitalize on any pick-up in infrastructure investments. The stock trades at 15x FY13E earnings, at a significant discount to LPA. Current valuations factor in possibilities of margin downgrades and negative financial leverage. We maintain Buy with an SOTP-based target price of INR 1380," says Motilal Oswal research report. 

Public holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment