MOSL: Morning India (11/October/17)-1. Larsen & Toubro (The Monitorable Troika)- 2. Coal India- 3. Tata Motors- 4. South Indian Bank

​MOrning India (11/October/17): 1. Larsen & Toubro (The Monitorable Troika); 2. Coal India; 3. Tata Motors; 4. South Indian Bank

Today’s top research idea

Larsen & Toubro: The Monitorable Troika; Focus shifts to orders, domestic execution and working capital

• Meeting FY18 order guidance (12-14% growth; MOSLe: 12% growth) is dependent on finalization of large-ticket domestic projects in Infrastructure and Defense. Post a subdued 1HFY18, the dependency on 2HFY18 would be high.
  
• E&C execution in 1QFY18 was up 14% YoY, primarily on account of a 15% jump in domestic E&C execution, a five quarter high. GST woes are likely to slow down growth during 2Q-3QFY18. We build in 10%/15% growth in FY18/19.
  
• Net working capital (NWC) has shown significant improvement, with NWC declining to 18% of sales in 4QFY17 against 25% in FY16. Working capital is likely to expand post a bottom in 4QFY17 to 18% (20% in 1QFY18) – pick-up in domestic execution and GST would be the key reasons.
  

Piping hot news

IMF pares India’s FY18 growth forecast but sees it regaining ‘fastest-growing’ title in FY19

• The International Monetary Fund (IMF) has pared India’s growth forecast for FY18, citing the lingering impact of demonetisation and disruption caused by the goods and services tax (GST) but expects a revival as structural reform bears fruit…