24 December 2011

Larsen & Toubro :: Stocks for 2012 : Hedge Research

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Larsen & Toubro Limited
Investment Profile: Moderate Horizon: 1-1.5 Yrs

Business Summary Larsen & Toubro Limited is an Indian multinational conglomerate; The Company has business interests in engineering, construction, manufacturing, information technology and financial services. L&T is India's largest engineering and Construction Company with a dominant presence in India's infrastructure, power, hydrocarbon, machinery and railway related projects. In recent years, L&T has expanded its global presence and international projects contributed 9% of its overall order book for the 2010-11 period. Considered to be the "bellwether of India's engineering sector", L&T was recognized as the Company of the Year in 2010. L&T has featured four times in Forbes Fab 50 list of the best public companies in the Asia-Pacific region. L&T works under operating divisions of Engineering & Construction Projects, L&T Power, Heavy Engineering, Construction, Electrical & Electronics, Information Technology and machinery & Industrial products.


Investment Rationale Larsen is a company, which has a strong brand name and track record mainly on the engineering and construction. The company has diversified its business across several industries. The company claims a successful growth story in its journey so far. L&T's activities are specialized in the areas of mainly Hydrocarbon, Power, Infrastructure, Defense, Electrical, Information Technology & Engineering Services, Turbines, Forging, Boilers, Railway, Construction, Medical, Coal, Fertilizer, Steel, Cement, Paper, Ship Building, Aerospace and Finance. L&T seems to be at a good level to buy for a long time investment. The company has good prospects to grow as always it has. The current dip in the stock is attributed to the macro headwinds like higher interest rates, inflation, policy inactions on several issues like mining, environmental issues, liquidity etc. These issues can't persist forever. Once these issues start to alleviate, L&T will show case a good picture, backed by its strong capabilities. As of now, the L&T seems to be valued reasonably with our DCF model suggesting a value of Rs. 1308 against the CMP of Rs. 1136, which says the stock is attractive in a long term point of view.

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Stocks for 2012 : Hedge Research



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