Motilal Oswal's research report on Larsen and Toubro
We recently interacted with Mr. S. N. Subrahmanyan, Chairman and MD of Larsen & Toubro (LT), to get insights into the company’s long-term growth strategy for domestic and international geographies, capital allocation and future focus areas. LT is optimistic about the Middle East region and expects ordering to grow in the midteens over the next five years from this region. Sector diversification and country diversification within the Middle East help LT tide over the volatility in oil prices. With private and government capex ramping up in select areas, LT overall hopes to maintain mid-teen growth in order inflows in the medium to long term. Management remains focused on its capital allocation strategy and expects to hive off non-core assets soon and keep investing in new-age areas over the next five years.
Outlook
We maintain our estimates and BUY rating on LT with an SoTP-based TP of INR4,500, based on 28x two-year forward earnings.
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