Motilal Oswal's research report on Larsen and Toubro
Larsen & Toubro (L&T)’s adj. PAT came in at INR11.7b, missing our estimates by 19%. However, the miss in core E&C EBITDA was lower at ~6%. The larger miss was reported on account of lower other income and higher tax rates, which is recoverable over the remainder of the year. Also, given that 1Q earnings typically contribute <15% to FY earnings, we refrain from reading too much into the current quarter’s headline numbers. Notably, the company has maintained its full-year guidance for low to mid-teen growth in order inflows and revenue as well as core E&C margins to be maintained at FY21 levels.
Outlook
We maintain our earnings estimate, but increase TP to INR1,835 (prior: INR1,700), driven by MTM of the CMPs of the listed subsidiaries (Holdco discount of 20%) and an unchanged target PE multiple of 20x on the core business.
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