Buy Larsen & Toubro, target price Rs 2200: Centrum Broking

Centrum Broking has buy call on Larsen & Toubro with a target price of Rs 2200. The current market price of Larsen & Toubro is Rs 1937.35. Time period given by analyst is one year when Larsen & Toubro Ltd. price can reach defined target.

Larsen & Toubro Ltd., incorporated in the year 1946, is a Large Cap company (having a market cap of Rs 268211.91 Crore) operating in Construction sector.

Larsen & Toubro Ltd. key Products/Revenue Segments include Income From Construction Work, Income from Manufacturing and Trading Activities, Other Operating Revenue, Other Services, Commission, Service (Engineering), Lease Rentals and Property Development for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 40134.31 Crore, up 13.68 % from last quarter Total Income of Rs 35305.04 Crore and up 9.47 % from last year same quarter Total Income of Rs 36661.08 Crore. Company reported net profit after tax of Rs 2496.86 Crore in latest quarter.

Investment Rationale
The brokerage expects 27% CAGR in consolidated EPS over FY22-24 with E&C business EPS growing at 21% CAGR over this period (E&C EPS: Rs57.9/Rs68.2 in FY23/24E). E&C business valuations at 16.6x/14.1x FY23/24E are reasonable, especially in light of a broader re- rating of cyclical stocks with a strong potential to rerate. The values E&C business at 20x average FY23-24 PAT (earlier 18x) and arrive at SOTP based TP of Rs2200.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of 31-Dec-2021, while FIIs owned 23.24 per cent, DIIs 32.7 per cent.