Published on 21/04/2017 3:44:21 PM | Source: Motilal Oswal Securities Ltd

Buy Larsen & Toubro Ltd For Target Rs.1,750.00 - Motilal Oswal

* LT announced order intake of INR278b in 4QFY17 compared to INR297b in 4QFY16. Order inflow during the quarter has been supported by large order finalization (>INR15b).

* Large orders worth INR210b were finalized during the quarter, of which domestic orders were INR105b and the balance were from overseas. Domestic order wins are supported by order finalization in the hydrocarbon and buildings and factories segments. Overseas order finalization was supported by the hydrocarbon and power T&D segments.

* For 4QFY17, we expect revenue growth of 12% YoY to INR371b. We expect operating profit to decline 9.1% YoY.

* We expect net profit to decline 2% YoY to INR23.9b.

* L&T-MHPS Boiler Private Limited has signed a technology license agreement for selective catalytic reduction systems. The technology licensing agreement is for design, engineering, manufacture, installation, commissioning, and sale of new boilers under BTG, EPC or SG packages or standalone SCR systems, and for existing and under construction boilers on exclusive basis in India. Maintain Buy.


Key issues to watch

* Net working capital (excluding financial services) at 22% of revenue in 2QFY17 remains high, given tight liquidity conditions.


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