Buy L&T, says Shailesh Kanani

Buy Larsen and Toubro (L&T), says Shailesh Kanani, Research Analyst, Angel Broking.

Kanani told CNBC-TV18, "On the results front, L&T numbers were pretty much above our estimates and consensus estimates as well. But the order inflow has been a kind of a disappointment for the quarter because the order inflow was year-on-year (YoY) down by around 25%. So the yearly target for the company was around 25% order inflow for the whole year. That seems to be steep now though the company has maintained the guidance but we believe that there would be some slippage on that front because that would require a run rate of around Rs 37,000 crore of orders for Q4, which would be a massive jump as compared to the last Q4 of last year, so that would be slippage." He further added, "Overall the numbers were pretty much good, there was a 40% jump on the topline front plus 30% jump on the bottomline front, margins were a little lower but in the inherent business of the construction industry, it happens sometimes. So we are satisfied with the numbers and we have recommended a buy. The target price is around Rs 1,964." "The margins have peaked out is right but that is in the range of 12.5-13%. What the numbers were or margins were in Q3 should not be taken as a benchmark peak because it is kind of a quarter and Q4 has traditionally been very strong for the company. If you see the trend in Q4, company has reported margins in the range of 14-15%, so you will see an uptick in the margins in Q4. But the margins should be stabled. That is what I would agree because commodity prices have gone up plus L&T is around 30% of its order book which is fixed price contracts in which if there is a commodity hike, it takes a hit. So margins I would say would be remaining flat as going ahead."