L&T - Q2FY14 Result Preview - Angel Broking

For 2QFY2014, we expect Larsen & Toubro (L&T) to record a revenue of Rs. 14,000cr, indicating a growth of 6.1% yoy. This growth can be attributed to the company's large order book (~Rs. 1.65trillion) and robust order inflows. On the EBITDA front, we expect the company's margin to witness a decline of 116bp yoy to 9.5%. We project the net profit to increase by 0.7% yoy to Rs. 878cr in 2QFY2014. We estimate the company's order inflow to be at ~Rs. 30,000cr for the quarter, which is in-line with the Management's guidance of 15-20% growth in order book for the full year.

At the CMP, the stock is trading at 16.1x FY2015E earnings and 2.2x FY2015E P/BV, on a standalone basis. We have used the sum-of-the-parts (SOTP) methodology to value the company to capture all its business initiatives and investments/stakes in the different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs. 1,002. We continue to recommend Buy rating on the stock.

Source : Equity Bulls

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