Buy Larsen amp; Toubro Ltd; target of Rs 1515: Geojit
Geojit’s research report on Larsen & Toubro Ltd
L&T is an engineering & construction (E&C) conglomerate. Further, it has presence in IT & financial services sectors. Consolidated sales posted a robust 10% YoY growth in Q3FY18 led by solid execution in infrastructure, hydrocarbon and heavy engineering segments. Order inflow surged 37.8% YoY led by domestic order inflows (up 71% YoY) in hydrocarbon and infrastructure segments resulting in 5% YoY growth in order backlog.
We project Sales/PAT CAGR of 12.2/17.5% over FY17-20E. Recovery in domestic business, strong order pipeline, sale of non-core assets, focus on improving RoE & working capital and healthy execution of large order backlog will drive the stock going forward. Hence, we upgrade the stock to BUY as we roll forward our valuation to FY20 with a SOTP based TP of Rs. 1,515.
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