Larsen & Toubro Ltd. share price target

Refer to important disclosures at the end of this report Counter-cyclical infrastructure spending to boost the economy not a realistic hope We appreciate your support in the Asiamoney Brokers Poll 2020 Several experts suggest a counter-cyclical infrastructure driven stimulus worth the size of 5-15% of GDP (as compared to estimated direct government-funded spend of below 3% in FY20) to bail out the economy. We took a deep dive into India's fiscal math just as we look at corporate finances to find that India does not...

Given current upside potential, we reiterate our BUY rating on the stock with a revised target price of Rs. 1,154 based on SOTP valuation. Economic disruption impacts performance Q1FY21 consolidated revenue came in at Rs. 21,260cr (-28.3% YoY), as the company saw declines in revenue from its verticals across the board, with exception of IT&TS; which registered a 57.2% YoY growth to Rs. 6,043cr. Among its key segments, Infrastructure revenues stood at Rs. 6,456cr (-53.1% YoY), Hydrocarbon at Rs. 3,070cr (-18.5%) and Financial Services at 3,284cr (-5.1). EBITDA fell 47.2% YoY to Rs....

TVSL's reported mixed set of results where revenues came in marginally lower at Rs14.3bn (-68% YoY, PLe Rs15b). Gross margins too came in lower at 24% (-90bp YoY/QoQ), PLe 27%). However, led by tight cost control, EBITDA loss restricted at Rs488m (PLe loss of Rs649m) while net loss at...

Larsen and Toubro Ltd.'s quarterly Profit misses Estimates, Ordering activity in infra and water to pick up in the later part of current fiscal Larsen & Toubro the engineering construction to software majorhas registered 28% fall in consolidated revenue to Rs 21259.97crore for the quarter ended Jun 2020.Lower sales together with 280 bps contraction in operating profit margin to 7.6%, the operating profit was dragged...

Larsen and Toubro (L&T;) reported decent performance in Q1FY2021 despite challenges. The company's operational performance was broadly in line with our estimates. L&T;'s revenue declined by 28% y-o-y to Rs. 21,260 crore, affected by 53% y-o-y decline in E&C; revenue (33% of revenue). L&T;'s core E&C; was affected by COVID-19 led stringent lockdown hampering project execution. The company lost Rs. 12,500 crore revenue in Q1FY2021 due to the lockdown. Operating profit margin (OPM) at 7.6% was lower by -273 bps y-o-y (marginally lower than estimates) as margins shrank across all segments. E&C; margins dipped by 340 bps to 3.9%, while service margins declined by 875 bps to 10.4% on losses on developmental...

23 July 2020 1QFY21 core operating performance was a welcome surprise as E&C; EBITDA came in 49% above our expectation, despite the low value. Losses in L&T; Finance Holdings offset the strong show in the IT business, limiting consolidated adj. Despite the current crisis, L&T; has impressed with its liquidity management, keeping its working capital and net cash position intact, and taking advantage of the low interest rate scenario. Adj. for the valuations of subsidiaries (we apply 20% holding company discount to market cap of 4-listed entities), the core business has underperformed Nifty by ~20% since the 4QFY20 results (June first week). Maintain Buy. The miss in core E&C; revenue (INR114b, -46% YoY) was more than offset by the margin surprise, thereby resulting in a 49% beat on our EBITDA estimates. Thus, core E&C; EBITDA came in at INR4.4b (-71% YoY), with a core EBITDA margin of 3.

Decent order inflows led by infrastructure & services segment For Q1FY21, L&T; registered reasonable order inflows at the group level worth | 23574 crore, which de-grew 39% YoY, characterised by low interest in fresh investment and order deferrals. International orders for Q1FY21 were at | 8872 crore contributing 38% to order inflows. Overall infrastructure segment contributed 48% to total inflows, which included orders in rural water supply scheme, expressway project and some international orders in power T&D;, mainly from Middle East while services contributed 42% to...

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...