HDFC Securities is bullish on Larsen and Toubro has recommended buy rating on the stock with a target price of Rs 1236 in its research report dated June 07, 2020.
HDFC Securities' research report on Larsen and Toubro
Larsen & Toubro Ltd (LT) reported 5/8/4% miss in 4QFY20 Rev/EBIDTA/APAT. COVID-19 disruptions led to LT missing Rs 17.5bn of revenue and Rs 4bn of PAT recognition. Collections target fall short of Rs 15bn. The labour situation is improving now with 1.2lakhs labour at site vs 70,000 low and is expected to ramp upto 1.7lakhs by June-20 end and 2.2lakhs by July-20. LT continues to balance growth and NWC discipline and doesn’t see achieving long term 10-15% growth and sub 23% NWC a challenge. Schneider deal is on track with likely closure by early 2QFY21, deal proceeds may partly get utilized towards rightsizing L&T Hyderabad capital structure. We believe 1HFY21 will be washout, but already in price.
Outlook
We maintain BUY on LT with SOTP of Rs 1,236/sh (vs. Rs 1,191/sh earlier).
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