Accumulate L&T; target of Rs 1603: Emkay

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Emkay Global Financial Services is bullish on Larsen and Toubro (L&T) and has recommended accumulate rating on the stock with a target of Rs 1603 in its July 23, 2012 research report.

“L&T posts strong 21% yoy growth in net profit in Q1FY13 driven by healthy order backlog execution and higher other income. Led by strong order backlog, L&T witnessed sustained revenue growth momentum – up 26% yoy to Rs119.6 bn. Revenue growth was led by E&C segment (up 30% yoy to Rs105 bn). EBITDA margins fell by 160 bps yoy to 10.5% (below estimates) – attributed to rise in input costs. High other income (+124% yoy to Rs6.1 bn) offset drop in EBITDA margins and forex loss of Rs1.7 bn (corporate MTM forex loss). Hence, APAT growth was ahead estimates at 21% yoy to Rs9.0 bn.”

“L&T secures orders worth Rs119.5 bn (+21% yoy) – equivalent to 24% of FY13E target order inflows. Order inflows were led by spillover of order finalization from Q4FY12 – contributing Rs78 bn or 40% of total orders. Sector-wise break-up of the orders was Infrastructure (65%), Power (21%) Hydrocarbon (2%), Process (5%) and Others (7%). Correspondingly, the order book also grew 12% yoy to Rs1531 bn – equivalent to 2.75X TTM revenues. L&T witnessed yet another quarter of operating cash outflow – led by continued deterioration of working capital. Net working capital increased from 11.9% in Mar’12 to 15.3% in Jun’12 – was the only negative element in Q1FY13 performance. Consequently, net operating cash outflow for Q1FY13 stood at Rs16 bn. Led by strong performance in Q1FY13, L&T maintained its guidance for FY13E. It reiterated 15-20% growth in order inflows and revenues with EBITDA margins at +/- 50 bps. We have fine-tuned our estimates to factor on-schedule project execution and revise upwards our earnings estimates by 2% to Rs83.1 and by 1% to Rs93.0 per share for FY13E and FY14E respectively.”

“L&T remains our top pick in the ECG sector being a proxy investment play and multiple growth levers. L&T has strong order book cover (2.75X TTM revenues) with earnings growth estimates in top quartile of comparative peer growth. However, we believe that upsides to earnings and valuations are capped – only caveat being positive government policy announcements. We have an Accumulate rating with a target price of Rs1603/Share,” says Emkay Global Financial Services research report.  

Institutional holding more than 40% 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

Read More