Result Reviews
L&T
Larsen and Toubro (L&T) posted good set of numbers for 2QFY2012, which were
above our expectations mainly on account of good top-line performance.
On the order booking front, L&T has an order backlog of `1,42,185cr as of
2QFY2012. Order inflow for the quarter stood at `16,096cr (`20,464cr), led by
the infrastructure segment (31%). The company has significantly cut its guidance of
order inflow from 15-20% to 5% for FY2012, 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. 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 underperformance of ~16.5% to BSE
Sensex over the last three months, we believe most of the negatives are factored in
and, hence, we maintain our Buy view on the stock with a revised target price of
`1,714 (`1,857). We have assigned lowered PE multiple of 18x (earlier 19x) to
L&T parent’s FY2013E EPS of `76.4 and its subsidiaries to factor in macro
headwinds faced by the sector and economy.
L&T
Larsen and Toubro (L&T) posted good set of numbers for 2QFY2012, which were
above our expectations mainly on account of good top-line performance.
On the order booking front, L&T has an order backlog of `1,42,185cr as of
2QFY2012. Order inflow for the quarter stood at `16,096cr (`20,464cr), led by
the infrastructure segment (31%). The company has significantly cut its guidance of
order inflow from 15-20% to 5% for FY2012, 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. 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 underperformance of ~16.5% to BSE
Sensex over the last three months, we believe most of the negatives are factored in
and, hence, we maintain our Buy view on the stock with a revised target price of
`1,714 (`1,857). We have assigned lowered PE multiple of 18x (earlier 19x) to
L&T parent’s FY2013E EPS of `76.4 and its subsidiaries to factor in macro
headwinds faced by the sector and economy.
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