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Larsen & Toubro Ltd. | Q1FY14 Result Update




IndiaNivesh Securities Pvt Ltd


23 Jul 2013





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 Result Updates Larsen & Toubro Ltd. | Q1FY14 Result Update Larsen & Toubro (L&T) reported bad set of numbers, at it disappointed us (and street) both, at operating and profitability level. Outlook: Even though the company is likely to attain its Order Inflow growth guidance for FY14E, we remain concerned about: Lower EBITDA margin of 8.5% reported in Q1FY14 (lowest in last 8 quarters). Likelihood of continued shift in Order Book mix (towards the low margin international business). Management expects ~20% of the total order wins in FY14E from International markets (Middle East & Africa). In Q1FY14, Order wins from International markets contributed 14% of the total. Continued pressure on the working capital cycle (managements guided that working capital as % of sales would remain high in 16.0-20.0% range for next few quarters). We have not made any changes to our estimates. Valuation: At CMP of Rs 902, L&T is trading at FY14E and FY15E, P/E multiple of 15.2x and 13.5x, respectively (on FY14E and FY15E EPS estimates of Rs 59.1 and Rs 66.8, respectively). We do not have any rating on the stock.

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