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Infra: Buy L&T L&T Best Risk-reward: Earnings growth in FY10-12E to continue at 19-20% CAGR despite large base
Consistent return ratios of ~20% and key beneficiary of any potential recovery in capex cycle will stem de-rating
potential
Earnings growth at limited risk given strong order backlog (3x Sales) and flexibility of in-house project execution
Risk of peers undercutting limited given the single-digit ROEs of its major competitors
Over the last 6 years L&T has traded at an avg 1-yr forward PE of ~24x vs current FY12E PE of 22x, limiting valuation downside
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