Irani`s view on Larsen and Toubro

Mehraboon Irani, Principal and Head - Pvt Client Group Business, Nirmal Bang shares his view on Larsen and Toubro (L&T).

Irani told CNBC-TV18, “There is nothing much honestly to look forward to L&T, because in general if you look at all sectors like power, infrastructure, capital goods, real estate, I think the problem with these sectors is that you require continuous flow of capital and not too much of investments. Capital investments are going to be made, are being made for quite sometime.”
He further added, “To give marks to L&T I think numbers wise no complaint. Execution wise the management has shown I would say a stellar performance. In terms of stating that we will grow 15-20% also came as a pleasant surprise but at the end of it all considering the fact that the outlook for sectors which require a continuous flow of capital and knowing the strains with the government is huddled in terms of funding and the mood among corporate right now is still very downbeat. So on the whole trying to think that okay, fine if I buy L&T at Rs 1,150 I don’t think the stock is going to be above Rs 1,350-1,400 after 12 months. Downside even if Rs 1,000 comes, you are not going to be able to defend it. So at the end of it all there is nothing much which one can be possibly doing with the stock of L&T just because they have given a 15-20% guidance, because the outlook for all the sectors which the capital is required and to the capital goods sector where L&T belongs to, I think remains very down right now.”
“Despite the fact that you may say the management is great, it’s a great company. Rs 1,100 is a price where one should be buying for the longer term, the fact is what is longer term right now, because if things don’t improve for the next two or three or four quarters I don’t think the stock is going to do anything despite the fact that 15-20% is not a bad number.”