Earnings Update - L&T (LT IN) - Weak Operational performance; PAT growth aided by lower tax expense - CSEC Research

Weak Operational performance; PAT growth aided by lower tax expense

- L&T's consolidated revenue grew by 12% YoY to INR 368.2bn in 4QFY17 due to high growth in Hydrocarbons and MMH segment.

- In 4QFY17, Revenue from Infrastructure grew by 10% YoY to INR 200bn, Power segment de-grew by 3% YoY to INR 18.4bn, Heavy Engineering Segment de-grew by 4% YoY to INR 9.1 bn, Electrical & Automation segment grew by 6% YoY to INR 14.5bn, Hydrocarbon segment grew by 6% YoY to INR 25.7bn, IT & Technology services segment grew by 8% YoY to INR 24.8bn, Developmental projects segment grew by 20% YoY to INR 10.1bn and other segment grew by 59% YoY to INR 41.3 bn (strong execution by Metallurgical and Material Handling (MMH))

- In 4QFY17 the company's order book grew by 9.6% YoY to INR 472.89bn and order inflow grew by 19%YoY to INR 90 bn.

Valuation: Margin expansion and strong order book growth are the key positives for the company. Armed with a strong order book, focus now shifts to execution. Currently, the stock is trading at a P/E of 21.3x FY19E EPS; we assign a target P/E of 22x on FY19E Consensus Est. to arrive at a target price of INR 1,843 and with a MARKETPERFORMER rating.

Risks: Pressure on margins, Slowdown of orders from Middle East.

Shares of LARSEN & TOUBRO LTD. was last trading in BSE at Rs.1784.2 as compared to the previous close of Rs. 1791.85. The total number of shares traded during the day was 82214 in over 3996 trades.

The stock hit an intraday high of Rs. 1804.5 and intraday low of 1778.75. The net turnover during the day was Rs. 146928693.

Source : Equity Bulls

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