Buy Larsen and Toubro; target of Rs 1260: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Larsen and Toubro

While LT 2QFY21 revenue/EBITDA/APAT was (7)/0.4/(19)% (miss)/beat on our estimate, robust FCF generation, contained NWC, and directionally strong commentary on ordering were key positives. LT has taken impairment on key non-core assets to make them monetisation ready. Talks on Hyderabad Metro project restructuring/refinancing have been initiated, and focus is on reinvesting the surplus E&A proceeds towards high RoE growth businesses. Despite near-term challenges, we reiterate BUY on LT, given its (1) strong order book (Rs 2.99tn, ~3x FY20 core EPC revenue), (2) healthy balance sheet and (3) robust services business.

Outlook

We tweak our FY21/FY22 estimate by 0.1/- 0.6% and keep the target price unchanged at Rs 1,260/sh.

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