Dear All,
Forwarding you the Result Update on L&T for 4QFY2011 with a Buy recommendation and a Target Price of `2033 (12 months).
Larsen and Toubro (L&T) posted mixed set of numbers for 4QFY2011. As of FY2011, L&T stands tall on an order backlog of `1,30,217cr. Order inflow for FY2011 stands at `79,769cr, up 15% yoy though lower than the earlier guidance of 25% but the slippage was much lower than expected. The company has given revenue guidance of 25% for FY2012, which we believe is aggressive considering that the headwinds are still plaguing the sector. On the order inflow front, the company has given guidance of 15–20%, which we believe is achievable considering L&T’s leadership position and diversification. L&T continues to be our top pick. We maintain our Buy rating on the stock.
Top-line below estimates, margins surprise àbottom-line ahead of estimates: L&T reported subdued top-line growth of 13.2% yoy to `15,384cr (`13,585cr), below our estimates. EBITDA came in as a surprise, above our expectations, mainly on account of execution efficiency, risk management and opex control. Thus, EBITDA margin stood at 15.2% vs. our expectation of 13.3%. Adjusting for extraordinary income (`149.0cr net of tax) and dividend from subsidiaries, the bottom line grew by 13.0% yoy to `1,537.2cr and surpassed our estimate of `1,365.0cr.
Outlook and valuation: L&T has a healthy order book, which provides revenue visibility for the next few years. We believe even if the company misses its revenue guidance of 25% for the year, it will deliver >20% growth, which is better than most of its peers. On the order booking front, management also indicated delays rather than cancellation of orders, which it expects to achieve in the ensuing quarters. Thus, post the recent correction, we believe it is a good opportunity for long-term investors to enter the stock at current levels. We maintain our Buy rating on the stock with a target price of `2,033.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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