Motilal Oswal is bullish on Larsen & Toubro has recommended buy rating on the stock with a target price of Rs 1650 in its research report dated January 31, 2018.
Motilal Oswal's research report on Larsen & Toubro
3QFY18 revenue increased 10% YoY to INR288b, in line with our estimate of INR290b. EBITDA rose 26% YoY to INR31.4b, with the margin at 10.9% (+130bp) versus our estimate of 10.4%. Core E&C segment margin stood at 8% (-10bp YoY) due to a higher share of infrastructure projects not reaching the margin recognition threshold. PAT of INR15b (+55% YoY) was ahead of our estimate of INR14.3b. Note that the INR2.9b provision for dues from cases referred to the Insolvency and Bankruptcy Board was accounted for as exceptional item and set off against INR2.7b profit on sale of EWAC Alloys.
OutlookWe maintain our Buy rating, with an SOTP-based TP of INR1,650 (E&C business at 25x FY20E EPS, at the higher end of the five-year trading band).
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