Accumulate L&T; target Rs 1081: P Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's report on Larsen and Toubro (L&T)

"L&T IDPL is likely to have an equity requirement of Rs 82bn over the next five years (FY14-18). Out of the Rs82bn, Rs62bn would be required to fund the existing projects and Rs20bn to fund new projects. The company plans to fund the total requirement through mix of asset monetisation (Dharma port, Hyderabad Metro etc.), sale of equity (both Holdco & SPV level) and securitization. IDPL maintained that it will use L&T as a lender of last resort in case it falls short of its plan of fund-raising due to any unforeseen circumstances. IDPL's management also highlighted that its priority was to de-risk L&T, then IDPL and finally growth, in that order. L&T's management is of the view that since it has already invested substantial equity in IDPL and seen steady decline in ROE over the last few years, it would like to see IDPL fund its future requirement through international generation/asset monetisation. L&T would want to limit further investment beyond current commitment in its quest to improve parent's RoE profile. Accumulate the stock with a target price of Rs 1,081," says Prabhudas Lilladher research report.

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