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India Equity Research Reports, IPO and Stock News
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Proxy to India's infra story: L&T has an order book of >`1.3tn, lending good
revenue visibility. L&T's strong balance sheet, a sound execution engine, wide array
of capabilities, integrated operations tailored to suit India's infrastructure growth
story and multiple, recurring value-unlocking triggers over the medium term lead
us to place faith in this default India infrastructure story.
Well-capitalised balance sheet funding the expansion: L&T has a well-capitalised
balance sheet at a debt-equity ratio of 0.3x as of FY2011, despite having a strong
portfolio of assets and having invested in future growth areas. We believe the key
factors for the same are 1) high margins and 2) better working capital management.
Buy L&T with an SOTP TP of `1,946: L&T has outperformed the BSE Sensex by
~12.5% over the last six months on the back of 1) strong quarterly performances;
and 2) robust guidance for FY2012. We expect the outperformance to continue as
we foresee pick-up in order inflows and revenue booking. Further, we have
discounted margin pressure in our numbers. 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 `1,946, which provides 19.4% upside from
current levels. Hence, we recommend Buy on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Proxy to India's infra story: L&T has an order book of >`1.3tn, lending good
revenue visibility. L&T's strong balance sheet, a sound execution engine, wide array
of capabilities, integrated operations tailored to suit India's infrastructure growth
story and multiple, recurring value-unlocking triggers over the medium term lead
us to place faith in this default India infrastructure story.
Well-capitalised balance sheet funding the expansion: L&T has a well-capitalised
balance sheet at a debt-equity ratio of 0.3x as of FY2011, despite having a strong
portfolio of assets and having invested in future growth areas. We believe the key
factors for the same are 1) high margins and 2) better working capital management.
Buy L&T with an SOTP TP of `1,946: L&T has outperformed the BSE Sensex by
~12.5% over the last six months on the back of 1) strong quarterly performances;
and 2) robust guidance for FY2012. We expect the outperformance to continue as
we foresee pick-up in order inflows and revenue booking. Further, we have
discounted margin pressure in our numbers. 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 `1,946, which provides 19.4% upside from
current levels. Hence, we recommend Buy on the stock.
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