MOSL: LARSEN & TOUBRO (Buy)-Guidance reflecting caution amidst ongoing elections
Larsen & Toubro: Guidance reflecting caution amidst ongoing elections
(LT IN, Mkt Cap USD27.2b, CMP INR1355, TP INR1850, 37% Upside, Buy)
- Strong execution rest fears of execution slowdown into elections: 4Q revenue grew 10.5% YoY to INR449b. This is in line with our expectation, but ended up surpassing ask rate as per management guidance. EBITDA margin stood at 12.5% (-80bp YoY) and was 140bp below our expectation. This is largely attributable to "others" segment (primarily realty segment as it can be lumpy due to new accounting standard IND AS 115). Superior cash flow generation led to higher other income. Thus, adj. PAT grew 8% to INR34.2b and was mere 2% below our expectation.
- Exceeds FY19 revenue/order inflow guidance; adj. core E&C margin flat: revenue grew 18% YoY in FY19, surpassing the higher end of the guided band of 12-15%. Order inflows (OI) also surprised with 16% growth, led by a strong increase in high-ticket-size orders (>INR25b ticket-size order inflows were at INR400b/23% of OI v/s INR150b/10% of OI in FY18). Adjusted for one-off provisions, core E&C margins were flat YoY at 10.5%.
Larsen and Toubro is engaged in the following business segments: Engineering & Construction; Electrical & Electronics; Machinery & Industrial Products; and Other. Engineering and construction segment comprises execution of construction projects in civil, mechanical and electrical engineering. Electrical and electronics segment comprises the manufacture and sale of switchgear, petroleum dispensing pumps, and medical equipment. Machinery and industrial products segment comprises the manufacture and sale of industrial machinery and equipment. Other segment includes property and software development, generation of power for consumption by Haldia Petrochemicals Limited, and financial services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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