YES Securities is bullish on Larsen and Toubro has recommended buy rating on the stock with a target price of Rs 1203 in its research report dated June 07, 2020.
YES Securities' research report on Larsen and Toubro
L&T delivered decent set of results as consol. PAT came in at Rs32bn (+8% vs est.). It lost revenues/ PAT/ collections of worth Rs17.5bn/ Rs4bn/ Rs15bn respectively in Q4FY20 owing to Covid-19 led lockdown. Consol. order book stood at Rs3trn, +4% yoy post removal of slow moving orders worth Rs290bn. Order inflow grew 5% yoy to Rs578bn (excl. E&A) led by infra segment (+34% yoy). FY20 Order inflow was up 9% yoy to Rs1,864bn (excl. E&A business) vs mgmt. guidance of 10-12% led by Infra (+7% yoy), Power (+301% yoy), Others (+108% yoy) & Services (+11% yoy) segments. Net working capital has remained largely unchanged qoq at 23.7% of sales. In these challenging times, L&T is following “Collect & Spend” policy to protect its capital.
Outlook
Retain BUY rating with SOTP based TP of Rs1,203 given its inexpensive valuations (Trades at 1yr forward EV/EBITDA of 13x vs long term avg. of 14x), healthy order book (book/bill ~2.2x) & proven execution capability.
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