Larsen and Toubro (L&T) posted good set of numbers for 2Q FY 2012, which were
above expectations mainly on account of good top-line performance.
Order Book
On the order booking front, L&T has an order backlog of Rs. 1,42,185 cr as of
2Q FY 2012. Order inflow for the quarter stood at RS. 16,096 cr (Rs. 20,464 cr), led by
the infrastructure segment (31%). The company has significantly cut its guidance of
order inflow from 15-20% to 5% for FY 2012, mainly to factor in general slowdown
faced by the sector; but it has maintained revenue growth guidance of 25% for the
whole year, which we believe is aggressive.
Buy View
We believe L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to its peers.
Further, at current valuations, after an under performance of 16.5% to BSE
Sensex over the last three months, we believe most of the negatives are factored in
and, hence, we maintain Buy view on the stock with a revised target price of
Rs.1,714 (Rs.1,857). We have assigned lowered PE multiple of 18x (earlier 19x) to
L&T parent’s FY 2013 E EPS of Rs.76.4 and its subsidiaries to factor in macro
headwinds faced by the sector and economy.
Review by Angle Broking
above expectations mainly on account of good top-line performance.
Order Book
On the order booking front, L&T has an order backlog of Rs. 1,42,185 cr as of
2Q FY 2012. Order inflow for the quarter stood at RS. 16,096 cr (Rs. 20,464 cr), led by
the infrastructure segment (31%). The company has significantly cut its guidance of
order inflow from 15-20% to 5% for FY 2012, mainly to factor in general slowdown
faced by the sector; but it has maintained revenue growth guidance of 25% for the
whole year, which we believe is aggressive.
Buy View
We believe L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to its peers.
Further, at current valuations, after an under performance of 16.5% to BSE
Sensex over the last three months, we believe most of the negatives are factored in
and, hence, we maintain Buy view on the stock with a revised target price of
Rs.1,714 (Rs.1,857). We have assigned lowered PE multiple of 18x (earlier 19x) to
L&T parent’s FY 2013 E EPS of Rs.76.4 and its subsidiaries to factor in macro
headwinds faced by the sector and economy.
Review by Angle Broking
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