Motilal Oswal is bullish on Larsen and Toubro has recommended buy rating on the stock with a target price of Rs 1610 in its research report dated January 25, 2019.
Motilal Oswal 's research report on Larsen and Toubro
Sales increased 24% YoY to INR357b, ahead of our estimate of INR323b, driven by Hydrocarbon (+22% YoY), Infrastructure (+24% YoY), IT (+29% YoY) and Finance (+20% YoY) segments. EBITDA increased 27% YoY to INR40b (our estimate: INR36b), with the margin coming in at 11.2%. EBITDA beat was driven by the Others and IT/TS segments. We highlight that (a) Infrastructure segment includes INR4b of provisions relating to time and cost overruns and (b) Others segment had INR5.5b of sales and profit relating to the sale of a commercial tower in 3QFY19. PAT increased 37% YoY to INR20.4b, ahead of our estimate of INR18b. NWC stood at 19.8% of sales (-70bp YoY). For 9MFY19, sales/EBITDA/PAT grew 22%/31%/31% YoY.
Outlook
We marginally tweak our estimates to build in the beat in 3QFY19 and maintain our Buy rating with an SOTP-based TP of INR1,610 (E&C business at 23x FY20E EPS, to which we add INR560 for subs).
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