Buy Larsen and Toubro; target of Rs 1850: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Larsen and Toubro

4Q revenue grew 10.5% YoY to INR449b. This is in line with our expectation, but ended up surpassing ask rate as per management guidance. EBITDA margin stood at 12.5% (-80bp YoY) and was 140bp below our expectation. This is largely attributable to "others" segment (primarily realty segment as it can be lumpy due to new accounting standard IND AS 115). Superior cash flow generation led to higher other income. Thus, adj. PAT grew 8% to INR34.2b and was mere 2% below our expectation.

Outlook

Our TP now increases to INR1,850. Adjusted for valuation of the services business, the core E&C business is available at FY20E/21E P/E of 18x/15x. Maintain Buy.

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