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Last Updated : Jan 29, 2013 12:42 PM IST | Source: Moneycontrol.com

Accumulate L&T; target of Rs 1694: KRChoksey

KRChoksey is bullish on Larsen and Toubro (L&T) and has recommended accumulate rating on the stock with a target of Rs 1694 in its January 25, 2013 research report.

 
 
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KRChoksey is bullish on Larsen and Toubro (L&T) and has recommended accumulate rating on the stock with a target of Rs 1694 in its January 25, 2013 research report.
 
“L&T registered net sales growth of 10.1% on a YoY basis as net sales increased to Rs 15,429.4 cr. However, the company registered operating margins of 9.6%, which was below our expectations. Interest cost increased in line with our expectation by 18.2% to Rs 238 cr as net working capital requirement increase to 17% of sales. In spite of lower operating margins and higher interest cost, PAT increased by 13% to Rs 1,121 cr on account of higher other income. Other income increased to Rs 530 cr on back of profit on sale of surplus properties and treasury income. Order inflows during the quarter increased by 14% YoY to Rs 19,545 cr, which came as a positive surprise on back of international orders. Order book stands at Rs 162,334 cr against Rs 145,768 cr at the end of Q3 FY12 and Rs 158,528 cr at the end of Q2 FY13.”
 
“L&T net sales grew by 10.2 % on a YoY basis as net sales increased to Rs 15,429 cr. Engineering & Construction (E&C) segment lead the growth; it grew by 11.4% and constituted 88% of sales. For 9M FY13, Net sales increased by 17% to Rs. 40,580 cr. For FY13E, the company has maintained its 15% to 20% sales growth guidance. The company registered EBIDTA margins 9.6%, which was below our expectations. Margins decline on account of higher input cost in project orders, sluggish short cycle product volumes and a MTM forex loss of Rs120 cr (primarily related to liabilities). For FY13E, the company has lowered its guidance to 50 to 100 bps decline in margins against a 50 bps decline in margins guidance earlier. Net Working capital stretched to approx 17 % of sales mainly to support the supply chain. Debt outstanding stands at Rs. 11,000 cr as of Q3FY13. The company expects net working capital requirement to stabilize at current levels.”
 
“L&T positively surprised on order inflows front and we believe it is on track to achieve its order inflow guidance for FY13E. The company has demonstrated strong execution and is best placed among its peers to benefit from revival in industrial capex. Considering the same we recommend an ACCUMULATE on the stock with price target of Rs 1,694 (based on SOTP based valuation and by assigning multiple of 16 times to its FY14E stand alone EPS of 83.4),” says KRChoksey research report.


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First Published on Jan 29, 2013 12:42 pm
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