Hold Larsen and Toubro; target of Rs 1045: ICICI Direct

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ICICI Direct's research report on Larsen and Toubro

L&T’s adjusted standalone revenues (ex- E&A business) for the quarter de-grew 15.8% YoY to Rs 15791.7 crore vs. our estimate of Rs 15102.3 crore. On a standalone basis, infrastructure segment posted a muted performance with revenue decline of 20.4% to Rs 12451.7 crore YoY. Heavy engineering segment revenue remained flat at Rs 708.1 crore YoY. On the other hand, power segment revenues saw some respite growing 40.1% to Rs 688.7 crore. Defence engineering segment revenue de-grew 19.7% to Rs 768.8 crore. Consequently, for Q2FY21, standalone adjusted PAT (excluding impairments, E&A proceeds) came to Rs 1051.6 crore, which de-grew 40.8% YoY (above our estimate of Rs 977.7 crore). On a consolidated basis, adjusted revenues from continuing operations on a like-to-like basis fell 12.2% to Rs 31034.7 crore on a YoY basis.

Outlook

We value L&T on SoTP (base business at 15.5x FY22E EPS) basis with a target price of Rs 1045. We maintain our HOLD rating.

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