Accumulate Larsen & Toubro, target Rs 2050: Yes Securities

Yes Securities has an accumulate call on Larsen & Toubro Ltd. with a target price of Rs 2050 .The current market price of Larsen & Toubro Ltd. is 1791.85 Time period given by analyst is year when Larsen & Toubro Ltd. price can reach defined target.
Good performance overallFor the full year FY17, L&T witnessed revenue growth of 7.9 per cent, EBITDA margin decline of 19 bps, and order inflow growth of 5.1 per cent YoY, thus, falling short of even its revised revenue and order inflow guidance of 10 per cent each. However, the company has done commendable job in cash flow management by (a) improving the working capital cycle to 19.0 per cent of sales from 23.0 per cent of sales in FY16; (b) sharp turnaround in the heavy engineering and hydrocarbon businesses; (c) consolidated EBITDA margin (ex-services) expanded 50 bps YoY to 9.5 per cent.
Strong FY18 guidancea) FY18 revenue growth guidance stands at 12 per cent YoY. In FY17, the total revenues (ex-services) grew by 8.2 per cent YoY. (b) The company’s order inflow growth guidance stands at 12.0 per cent-14.0 per cent. (c) On the margin front, it expects EBITDA margin expansion by 25bps.
Upgrade to ACCUMULATE with TP of Rs 2,050 We expect L&T to witness revenue/ EBITDA/ adj. PAT CAGR of 13.3 per cent/17.0 per cent/17.7 per cent over FY17-19E. We assign a TP of Rs 2,050 to the stock based on sum-of-the-parts (SOTP) methodology. At CMP, the stock trades at FY18E/FY19E PE of 24.0x/20.1x. Upgrade to ACCUMULATE.