Jefferies bullish on L&T, sets Rs 1,900 price target
The stock has gained 63% in the last one year but it has been largely range-bound since its post-Budget high of ₹1,593 in February 2021, partly due to the second wave of Covid-19 delaying order flow announcements.
By ET Bureau | Updated:
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Jefferies expects L&T to post compounded growth of 17% during FY21-FY23.
Mumbai: Jefferies is bullish on construction and engineering major Larsen & Toubro (L&T) as it expects upside triggers to fructify in October-November.
The brokerage’s ₹1,900 target price implies an upside of over 25% from L&T’s Tuesday’s closing level of ₹1,513.35.
The stock has gained 63% in the last one year but it has been largely range-bound since its post-Budget high of ₹1,593 in February 2021, partly due to the second wave of Covid-19 delaying order flow announcements. Jefferies said Project Lakshya updates will give clarity on medium-term return on equity and revenue trajectory.
“We believe L&T is on a re-rating path as it continues to walk the talk on prudent capital allocation and with capex showing recovery trends,” said Jefferies.
Jefferies noted that L&T’s annual report is more optimistic on India’s capital expenditure cycle compared to recent annual reports. The management mentioned in the annual report that private sector balance sheets are looking healthier.
Jefferies expects L&T to post compounded growth of 17% during FY21-FY23.
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Hydrocarbon segment and heavy engineering should continue to see improving margin trends while rising share of domestic execution backed by orders that have picked up in the last two years gives margin comfort, said Jefferies.
In the upside scenario, the brokerage sees L&T shares’ target price at ₹2,100. In case of downsides, it sees the stock at ₹1,100.
