Buy Larsen & Toubro; target of Rs 2000: Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Motilal Oswal's report on Larsen & ToubroLack of large order wins in 1HFY16 puts FY16 guidance of 15% growth in order flow at risk. We model 9% order growth versus 13% earlier, which still implies an order book growth of 27%.The Monitorable Troika: The street’s focus is now on execution, working capital and hydrocarbon margins. Our sensitivity analysis of the impact of lower oil prices shows that if there is a two-year delay in key overseas projects, sales and EPS would be impacted by 2-3%.Correcting the capital structure a priority; monetization of assets a step in the right direction.LT is exposed to several levers across business/geographic segments and has emerged as the E&C partner of choice in India, which provides a robust foundation to capitalize on the next leg of the investment cycle.Management intent is to improve consolidated RoE to 20% (11.2% in FY15) and RoCE to 15% (8% in FY13) in the medium term. Capping investments in concession business / asset monetization are important parts of this strategy.Manufacturing businesses (like Shipyard, Power BTG, Forgings, etc) also present interesting possibilities in the longer term. Many of these businesses are difficult to replicate and LT is strongly positioned as a dominant player.We model consolidated EPS at INR51.1 in FY16 (up 8%) and INR 65 in FY17 (up 27%). We maintain Buy with an SOTP-based price target of INR 2,000, says Motilal Oswal research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More