Buy Larsen & Toubro; target of Rs 1720: Firstcall Research

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26 Aug, 2025 12:21

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 Firstcall research report on Larsen & Toubro Ltd

Larsen & Toubro Ltd (L&T) is a technology, engineering, construction & manufacturing company. L&T is a technology-driven USD 14.3 billion company that infuses engineering with imagination. It is considered as one of the largest and most respected companies in India's private sector.Larsen & Toubro Limited is the biggest legacy of two Danish Engineers, Henning Holck-Larsen & S.K. Toubro who built a world-class organization that is professionally managed and a leader in India's engineering and construction industry. Holck-Larsen and Toubro founded the partnership firm of L&T in 1938, which was converted into a limited company on February 7, 1946. Today, the company has grown to a large conglomerate spanning engineering and construction. ECC was conceived as Engineering Construction Corporation Limited in April 1944 and was incorporated as wholly owned subsidiary of Larsen & Toubro Limited. L&T has an international presence, with a global spread of offices. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have  established a reputation for strong customer support.

>>At the current market price of Rs.1536.55, the stock P/E ratio is at 24.89 x FY15E and 23.00 x FY16E respectively.

>>Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 61.73 and Rs. 66.82 respectively.

>>Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 13% over 2013 to 2016E respectively.

>>On the basis of EV/EBITDA, the stock trades at 15.66 x for FY15E and 14.20 x for FY16E.

>>Price to Book Value of the stock is expected to be at 3.62 x and 3.13 x respectively for FY15E and FY16E.

Notwithstanding the improved sentiments, the domestic business environment and investment cycle continued to remain subdued during the quarter ended June 30, 2014. While the currency markets were stable and the capital markets were buoyant, high inflation, elevated interest rates and tight liquidity conditions persisted during the quarter. The Company weathered domestic slowdown by strengthening its international presence in the select overseas markets amidst strong competitive pressures. The domestic market holds large potential awaiting impetus through policy measures and conducive investment environment. The Company expects good prospects in the medium term from revival of core sectors such as infrastructure, power, minerals & metals, defence and oil & gas when the initiatives by the new government at the centre take definitive shape and rigour. The Company is confident of sustaining its growth momentum by utilizing the emerging opportunities for which it has positioned itself well. Hence, we recommend ‘BUY’ in this particular scrip with a target price of Rs.1720.00 for Medium to Long term investment.

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