Please refer to important disclosures at the end of this report
Larsen & Toubro (L&T) enjoys several levers across business/geographical
segments, and has emerged as the E&C partner of choice in India. This provides
it with a robust foundation to capitalize on the next leg of the investment cycle.
The management intends to improve consolidated RoE to 18% (12% in FY17) by
FY21. Capping investments in concession business/asset monetization are
important components of this strategy. Manufacturing businesses (like shipyard,
power BTG, and forgings) also offer interesting growth avenues over the longer
term. Many of these businesses are difficult to replicate, bolstering L&T’s position
as a dominant player. Strong momentum being witnessed across domestic
infrastructure verticals Rail/Metros, T&D, Water, Smart Cities, Airports, and
Ports; Hydrocarbons and Defense also witnessing recovery which will improve the
revenue further. L&T has been maintaining a healthy dividend payout of 34.59%.
It has reported top line growth of 10% CAGR and bottom-line of 8% CAGR over
FY2012-17. Further, the company’s debt/equity ratio has improved from 2.22 in
FY2015 to1.93 in FY2017 and has maintained hefty cashflow `6234cr in
FY2017.EBITDA margin has remained constant between 15-16% from FY2014-
17.L&T is trading at 15.48x EV/EBITDA and has reported RoE of 14.12% of FY17
TTM earnings. Hence Buy.
CMP `1237
Reuters Code
BSE Sensex
Face Value (`)
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Larsen & Toubro Ltd
Others | Construction
Sept 19, 2017
Larsen & Toubro Ltd |Construction
June 5, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Larsen & Toubro
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)