Here’s why Samir Arora considers L&T to be a good buy

Samir Arora said that 20 percent of their funds, which used to be parked in IT, now isn't allocated to the sector.

The Larsen & Turbo stock, according to Jefferies, always outperforms the indices one year before the elections owing to order accelerations , said Samir Arora, founder of Helios Capital in an interview with Moneycontrol on July 4.

Brokerage firm Jefferies tracked the performance of the L&T stock for the past four election periods starting from 2004 to 2019. The company identified a pattern of underperformance over three years but an outperformance pattern over the remainder of one year prior to the elections. Arora has invested in the stock by placing his bets on this cyclical pattern.

At 2 pm, the L&T stock is trading nearly 1 percent higher at Rs 2,466.00 on the NSE on July 4.

Watch the full interview here

Brokerage firm Jefferies has given a buy rating to the stock with an increased target price of Rs 2900. Jefferies justifies the rating based on expected order inflows worth Rs 481 billion and LT having met 34 percent of the brokerage’s quarterly revenue expectations. The increased target price is 18 percent higher than the current market price of Rs 2466.00.

For the quarter ended March, the LT reported a 17 percent year-on-year increase in sales to Rs 183,341 crores. The net profit grew by 20 percent to Rs 12531 crore in FY23 as compared to the previous year. The Operating Profit Margins (OPM) stand at 15 percent and the Earnings Per Share is Rs 74.50.

The Larsen & Turbo share has delivered a 9 percent return over the past month and a 56 percent return over the past year.