Larsen & Toubro Ltd. share price target

Q1 execution continued to be impacted by the pandemic but LT managed to avoid losses. Order inflows were decent at Rs235bn and orderbook continues to be strong at Rs3.05trn. WC, at 26.8% sales, while high, has to be seen in context of the lower revenue base in Q1. LT remains cautious and continues to withhold guiding on FY21 on inflows or execution, given the ongoing operating uncertainty. We expect execution disruptions to continue in H1, mainly due to labor challenges, before it picks momentum in H2....

providing a strong revenue visibility for the future. Management indicated that the tender pipeline looks encouraging with ~Rs6.3trn (domestic- 79%, International- 21%) projects in bid pipeline. In the short run, they expect segments such as Heavy Civil, Hydrocarbon, Power transmission, Water and Irrigation to see good traction of ordering activity. Similarly, portfolio diversity and dependence on public capex/ PSU investments would help mitigate cyclicality in the long run. We expect L&T; to face near-term challenges due to pandemic but believe...

We tweak our FY21/22E estimate by 16.6%/3.1% respectively as we incorporate higher revenues from termination of multi-year contract. Termination of AIL's marquee contract to supply agro chemical intermediates is a setback, as the company has to now scout for new opportunities, which are likely to be of lower margins against 40% EBIDTA margin for the terminated one. This will reduce the LT margin profile of AIL. Payment of termination fee of USD120-130m by March 22 will reduce NPV loss to ~24%, in our view. The project economics will further improve as the company plans...

Given attractive valuation and upside potential post recent correction, we reiterate our BUY rating on the stock, with a revised target price of Rs. 1,120 based on SOTP valuation. LTI & Mindtree led topline growth Company reported Q4FY20 revenue of Rs. 44,245cr (+2,2% YoY), driven by growth from IT Services (+68.8% YoY, led by LTI, LTTS, and Mindtree), Hydrocarbon (+15.1%, driven by execution of large opening order book) and Financial Services segment (+5.8%). This was partially offset by weaker revenue from Infrastructure (-5.7% YoY),...

Larsen & Toubro the engineering construction to software major has registered 2% growth in consolidated revenue to Rs 44245.28 crore for the quarter ended Mar 2020. However with 60 bps contraction in operating profit margin to 11.6%, the operating profit was down by 3% to Rs 5121.04 crore. As other income stand higher by 8% to RS 660.48 crore, the fall at PBIDT was restricted at 2% to Rs 5781.52 crore. But with interest and depreciation stand higher, the PBT...

7 June 2020 4QFY20 core operating performance was below expectation as E&C; EBITDA missed our expectation by 16%. Higher other income and lower taxation cushioned the impact, limiting consolidated adj. While macro variables may not be controllable for management, navigated these challenges multiple times in the past, and the core E&C; business remains cash generating. Factoring the macro risks, we cut our core E&C; EPS by 1618% over FY21 22E. The consolidated EPS cut is limited to 11%/13% in FY21/FY22E as the IT businesses (LTI, LTTS, and Mindtree) provide some support. PAT CAGR at 7%/7%/2% as tax rates While the near-term outlook may look hazy, L&T; remains the best proxy of the Indian capex story and is likely to further consolidate its market share in the post-COVID-19 era. A disappointing operating performance was offset by higher other income (+8% on high base), a lower tax rate (22.

due to uncertainties, however it is banking on new orders in heavy civil, water & power TD from States & Central govt, backedbyfundingfrommultilateralagencies. Though8090%ofL&T;'ssitesareoperationalcurrently,labour squeeze at projects sites (~40% availability) poses execution challengesinH1FY21.Itexpectsthingstonormalizein30days. WhileL&T;willfaceneartermheadwindsonnewordersand execution,wethinklongtermoutlookremainsstrongledby,i)...

Q4 execution was impacted by the pandemic but decent order flows of Rs577bn(5% yoy) helped it end FY20 inflows with a 9% yoy growth vs the guided range of 10-12% and 12-15% respectively. WC, at 23.7%...

Larsen and Toubro (L&T;) reported steady performance in Q4FY2020 despite challenges. The company's performance was in line with our estimates. L&T;'s revenue stood at Rs. 44,245 crore, up 2.2% y-o-y (in line with our estimate). L&T;'s ex-services revenue, which comprises 77% of total revenue, declined by 5% y-o-y to Rs. 33,941 crore, as revenue across segments declined y-o-y, barring hydrocarbons (up 15% y-o-y). Infrastructure (75% of ex-service revenue) declined by 6% y-o-y on account of slow-moving orders, stoppage of A.P. jobs, funding constraints, and COVID-19 impact. The company lost Rs. 1,750 crore revenue, Rs. 400 crore PAT, and Rs. 1,500 crore...

28-30% in 2HFY20 versus 37-38% in 1HFY20 mainly on account of marketing expense and increase in MR count. We have increased our earnings estimates for FY21E and FY22E by 6% post encouraging growth in top-10 brands, better gross margin (85%) in Q4FY20 and management guidance. Maintaining PE 21x of FY22E earnings, our new TP is Rs576 (previous Rs547) and we also change our rating to Accumulate' (earlier BUY) due to recent rally in stock price. Performance better than expected: Revenue/EBITDA grew 16% and 24% YoY...