Merrill Lynch upgrades Larsen & Toubro to 'Buy'
Merrill Lynch raises the price target of Larsen & Toubro to Rs 2,000 from Rs 1,715 on a hike in EPS by 4-5% led by surprise in inflows and re-rating of E&C (engineering and construction) to 19x (18x) on improving visibility.
By ET Bureau |
RESEARCH: MERRILL LYNCH
RATING: BUY
CMP: Rs 1608
Merrill Lynch raises the price target of Larsen & Toubro to Rs 2,000 from Rs 1,715 on a hike in EPS by 4-5% led by surprise in inflows and re-rating of E&C (engineering and construction) to 19x (18x) on improving visibility.
An EPS CAGR of 27% (FY10-12 E) and creation of growth vehicles in power equipment, naval shipyard, railways, nuke and aerospace domains and infra concession wins support of a `Buy' rating. It is led by an improving visibility of orders from roads, oil and gas, and infra space like urban infra, high-rise buildings, railways, etc.
Merrill Lynch thinks L&T should be able to meet its 25% Y-o-Y inflow guidance on a high base. Improved inflows from Q3FY10 should support sales growth at 20% Y-o-Y as delayed projects get grounded following improved funding (especially of own roads). Management highlighted buy out of minority PE investors to consolidate ownership at L&T IDPL (infrastructure development) arm.
RATING: BUY
CMP: Rs 1608
Merrill Lynch raises the price target of Larsen & Toubro to Rs 2,000 from Rs 1,715 on a hike in EPS by 4-5% led by surprise in inflows and re-rating of E&C (engineering and construction) to 19x (18x) on improving visibility.
An EPS CAGR of 27% (FY10-12 E) and creation of growth vehicles in power equipment, naval shipyard, railways, nuke and aerospace domains and infra concession wins support of a `Buy' rating. It is led by an improving visibility of orders from roads, oil and gas, and infra space like urban infra, high-rise buildings, railways, etc.
Merrill Lynch thinks L&T should be able to meet its 25% Y-o-Y inflow guidance on a high base. Improved inflows from Q3FY10 should support sales growth at 20% Y-o-Y as delayed projects get grounded following improved funding (especially of own roads). Management highlighted buy out of minority PE investors to consolidate ownership at L&T IDPL (infrastructure development) arm.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
