Buy L&T, tgt Rs 2904: IL&FS Investsmart
IL&FS Investsmart has maintained buy rating on Larsen and Toubro with target price of Rs 2904 in its July 08, 2008 report. "L&T, India’s largest engineering and construction company, is set to become a Rs510bn enterprise by 2010 with 33% CAGR in sales and 40% in PAT through FY08-10E. L&T’s ability to execute large and complex projects in different verticals places it miles ahead of its competitors. We initiate coverage on L&T with SOTP-based price target of Rs 2904 (19xFY10E). L&T’s stock price has corrected 47% from its peak, de-rating from 28x 18-month forward earnings to present 14x. The sharp rise in commodity prices, present worrisome macro environment and hedging losses in FY08 has shaken investor confidence in the stock to some extent. However, we strongly believe in L&T’s business prospects and the canvas of opportunity that it has, far outweighs the above negatives and hence should command a higher Price Earning Multiple. We initiate coverage on the L&T with a ‘BUY’ rating and a price target Rs 2904 (based on SOTP valuations), resulting in consolidated 19x FY10e PER" according to IL&FS Investsmart report.
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