Buy L&T; target of Rs 1388: Firstcall Research

Firstcall Research is bullish on Larsen and Toubro (L&T) and has recommended buy rating on the stock with a target of Rs 1388 in its May 15, 2012 research report.

“Larsen & Toubro Ltd (L&T) is a technology, engineering, construction & manufacturing company. L&T is a technology-driven USD 11.7 billion company that infuses engineering with imagination. It is considered as one of the largest and most respected companies in India's private sector. Larsen & Toubro Limited is the biggest legacy of two Danish Engineers, Henning Holck-Larsen & S.K. Toubro who built a world-class organization that is professionally managed and a leader in India's engineering and construction industry. Holck-Larsen and Toubro founded the partnership firm of L&T in 1938, which was converted into a limited company on February 7, 1946. Today, the company has grown to a large conglomerate spanning engineering and construction. ECC was conceived as Engineering Construction Corporation Limited in April 1944 and was incorporated as wholly owned subsidiary of Larsen & Toubro Limited. L&T has an international presence, with a global spread of offices. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support.”

“L&T Ltd. has reported net profit of Rs 19204.00 million for the quarter ended on March 31, 2012 as against Rs 15862.10 million in the same quarter last year, an increase of 13.89%. It has reported net sales of Rs 184609.00 million for the quarter ended on March 31, 2012 as against Rs 153842.10 million in the same quarter last year, a rise of 20.00%. Total income grew by 19.18% to Rs 187751.00 million from Rs. 157540.30 million in the same quarter last year. During the quarter, it reported earnings of Rs 31.36 a share.”

“At the current market price of Rs 1207 the stock is trading at 15.05x FY13E and 13.54 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.80.20 and Rs.89.17 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 12% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 8.72 x for FY13E and 7.87x for FY14E. Price to Book Value of the stock is expected to be at 2.45 x and 2.08 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1388 for medium to long term investment,” says Firstcall Research report.

Shares held by Mutual Funds/UTI

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