Accumulate L&T; target of Rs 2013: Angel

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26 Aug, 2025 12:21

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   Angel Broking's report on Larsen and Toubro (L&T)

"For 1QFY2016, Larsen & Toubro (L&T) reported 3.6% yoy increase in its standalone top-line to `10,710cr, reflecting lower revenue booking across Infrastructure, MMH and HE segments. EBITDA margin for the quarter is down 142bp yoy to 9.1%, on account of surge in SGA and employee expenses. Reported PAT declined by 21.6% yoy to `701cr, owing to higher interest expenses. Order Inflows for consolidated entity declined 21.0% yoy to `26,376cr. L&T’s order backlog stands at `2,38,973cr, thereby giving revenue visibility for over the next 30 months."

Outlook and valuation: "L&T’s diversified presence, and an anticipated recovery in the capex cycle coupled with the company’s strong balance sheet comfort us that it is well positioned to benefit from revival in the award activity environment. With order backlog expected to grow, execution should pick-up gradually. We have valued the company using the sum-of-the-parts (SoTP) methodology, to capture the value of all its businesses and investments. Ascribing separate values to its parent business (on a P/E basis) and investments in subsidiaries (using P/E, P/BV and M-cap basis), we arrive at FY2017E based target price of `2,013. We are of the view that L&T is a good proxy play for investors wanting to ride on the revival of the Indian infrastructure growth story. Given 12.5% upside potential in the stock from current levels, we maintain Accumulate rating on the stock", says Angel Broking research report.

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