Buy Larsen & Toubro, target price Rs 1625: Motilal Oswal

Buy Larsen & Toubro, target price Rs 1625:  Motilal Oswal

Motilal Oswal has buy call on Larsen & Toubro with a target price of Rs 1625. The current market price of Larsen & Toubro Ltd. is Rs 1360.7.

Larsen & Toubro Ltd., incorporated in the year 1946, is a Large Cap company (having a market cap of Rs 191997.00 Crore) operating in Construction sector.

For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 35596.42 Crore, up 14.70 % from last quarter Sales of Rs 31034.74 Crore and down -1.78 % from last year same quarter Sales of Rs 36242.68 Crore. Company reported net profit after tax of Rs 2849.08 Crore in latest quarter.

Investment Rationale
L&T has rightly prioritized Balance Sheet strength over growth during the current COVID-19 crisis. On the back of E&A sale, current cash and cash equivalents stand over INR450b, with negligible net gearing in the core business. All time high order book (3QFY21: +8%; FY21E: +16%), with OB-torevenue ratio of 3.7x should help it clock ~16% revenue CAGR over FY21- 23E. It raises FY21E EPS by 9% on account of the surprise in headline numbers, but keep the FY22E/FY23E EPS largely unchanged.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of Dec 30, 2020, while FIIs held 22.3 per cent, DIIs 33.3 per cent and public and others 44.4 per cent.

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