'Hold' L&T - TP Rs.1400 - Geojit BNP Paribas Financial Services

- L&T has been downgraded to 'hold' with an unchanged target price of Rs.1400. The downgrade is only because there is very limited upside from the current price of around Rs.1398.

- The stock has moved up around 17% in the last one month to the current price when the Sensex moved up 6.7% and the upside seems limited from the current level.

- The stock remains fundamentally positive but it seems better to wait for a better entry point.

- Currently, the stock trades at 14.8 P/E after adjusting for its subsidiaries. The outlook may be more positive at lower levels.

- The company is looking to raise funds to invest in its projects by divesting stakes in its Dhamra Port. This strategy is in line with their objective of not locking up funds generated from operations in long gestation projects. Any news on such sales will be sentiment positive for the stock.

- The target price of Rs.1400 is at 15 standalone P/E. Batter than expected order flows, revenues or margins and better valuation of assets are upside risks to the target price.

- Also, there would be downside risk to the target price if it disappoints on any of these metrics.

- The company is expected to achieve comfortably the lower end of their guidance.

Source : Equity Bulls

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