Hopes of improved profitability driving up L&T's stock

Shift from owning assets to functioning as an EPC, annuity contractor supports its long-term plans

Hamsini Karthik  |  Mumbai 

The Larsen and Toubro (L&T) stock has been a surprise winner, gaining 22 per cent year-to-date, much higher than the Sensex’s 12.5 per cent. This is despite a lacklustre December quarter showing. But, the Street is willing to put all the disappointment behind. “L&T today has reached a certain scale that it would be unfair to see the company expand its order book by 12-15 per cent over a year hereon, given its base effect and the operating conditions which haven’t turned totally favourable yet,” a fund manager invested in the stock said. Therefore, he said that ...

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Hopes of improved profitability driving up L&T's stock

Shift from owning assets to functioning as an EPC, annuity contractor supports its long-term plans

The stock of Larsen and Toubro (L&T) has been a surprise winner gaining over 22 per cent year-to-date, much ahead of BSE Sensex's 12.5 per cent. This is despite a lacklustre December quarter show. But, interestingly the Street is willing to put all the disappointments behind and look at the bright side of the company. "L&T today has reached a certain scale that it would be unfair to see the company expand its order book by 12-15 per cent year-on-year hereon, given its base effect and the operating conditions which haven't turned totally favourable yet," a fund manager invested in the stock explains.Therefore, he believes that what analysts would closely monitor is whether L&T is taking the right steps to reduce its working capital ratio and monetise its non-core assets. Analysts at Jefferies, who recently upped their 12-month target price on L&T to Rs 2,000 (nearly 20 per cent upside), say that the company has begun the process of improving its return ratios from the .. The Larsen and Toubro (L&T) stock has been a surprise winner, gaining 22 per cent year-to-date, much higher than the Sensex’s 12.5 per cent. This is despite a lacklustre December quarter showing. But, the Street is willing to put all the disappointment behind. “L&T today has reached a certain scale that it would be unfair to see the company expand its order book by 12-15 per cent over a year hereon, given its base effect and the operating conditions which haven’t turned totally favourable yet,” a fund manager invested in the stock said. Therefore, he said that ... image
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