Buy Larsen and Toubro; target of Rs 1200: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's research report on Larsen and Toubro

Q1 execution continued to be impacted by the pandemic but LT managed to avoid losses. Order inflows were decent at Rs235bn and orderbook continues to be strong at Rs3.05trn. WC, at 26.8% sales, while high, has to be seen in context of the lower revenue base in Q1. LT remains cautious and continues to withhold guiding on FY21 on inflows or execution, given the ongoing operating uncertainty. We expect execution disruptions to continue in H1, mainly due to labor challenges, before it picks momentum in H2.

Outlook

LT is fully focused on cash and working capital in these challenging times. LT remains the best play for the recovery in the capex cycle. We believe its size, diversity and balance sheet will be key competitive advantages. Current valuations continue to be supportive in our view. We maintain Buy with a SOTP based TP of Rs1200.

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