Buy L&T; target of Rs 2013: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking's report on Larsen and Toubro (L&T)

"For 4QFY2015, Larsen & Toubro (L&T) reported a decline of 5.5% yoy in its standalone top-line to Rs 18,968cr, reflecting lower revenue booking across Power, Metallurgical & Material Handling (MMH), Heavy Engineering (HE) and Others segments. EBITDA margin for the quarter was down 132bp yoy to 13.1%, on account of surge in SGA expenses. Reported PAT declined by 24.3% yoy to Rs 2,061cr, owing to higher depreciation and interest expenses. Order inflow for the consolidated entity increased by 39.1% yoy during the quarter to Rs 47,582cr; the total consol. order inflow for FY2015 stood at Rs 1,55,367cr (up 22% yoy). L&T’s order backlog stands at Rs 2,32,649cr, thereby giving revenue visibility for over the next 30 months."

Outlook and valuation: "L&T’s diversified presence, and an anticipated recovery in the capex cycle coupled with the company’s strong balance sheet comfort us. L&T is well positioned to benefit from a revival in the award activity environment. With order backlog expected to grow, execution should pick-up from here-on. We have valued the company using sum-of-the-parts (SOTP) methodology, to capture the value of all its businesses and investments. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries (using P/E, P/BV and M-cap basis), we arrive at a FY2017E based target price of Rs 2,013. We are of the view that L&T is a good proxy play for investors wanting to ride on the revival of the Indian infrastructure growth story. Given the 18.2% upside potential in the stock from the current levels, we maintain our Buy rating on the stock", says Angel Broking research report.

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