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Buy Larsen and Toubro; target of Rs 1960: Emkay Global Financial

Emkay Global Financial is bullish on Larsen and Toubro has recommended buy rating on the stock with a target price of Rs 1960 in its research report dated July 27, 2022.

July 28, 2022 / 07:16 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

 
 
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Emkay Global Financial's report on Larsen and Toubro


LT reported a PAT of Rs17bn for Q1FY23, slightly below Street estimates on the back of lower EBITDA margins in the Infrastructure segment (6.5% vs. 7.1% in Q1FY22), largely due to higher commodity prices. Revenue was up 22% to Rs359bn, driven by 36%/30% growth in Infrastructure/IT segments. Order inflow (ex-services) stood at Rs280bn - up 85% YoY, though it was still marginally below the Q1FY20 level. Order prospects currently stand at Rs7.6tn and LT is hopeful of achieving its guidance of 12-15% growth as it has been selective in bidding. The order book at the end of the quarter stood at Rs3.6tn, with Infrastructure/Energy/Hi-Tech manufacturing segments contributing 73%/18%/5%.



Outlook


We maintain Buy with a Mar’24E TP of Rs1,960. LT’s core business currently trades at ~18x FY24E EPS. In a bid to improve profitability, LT is looking to exit its non-core assets such as IDPL and Nabha Power and also to cut stake in the Hyderabad metro.

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Larsen & Toubro - 270722 - emkay

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first published: Jul 28, 2022 07:16 pm
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