MOSL: Morning India (21/December/17): 1. Larsen & Toubro; 2. Coal India; 3. Ajanta Pharma; 4. Technology
​MOrning India (21/December/17): 1. Larsen & Toubro; 2. Coal India; 3. Ajanta Pharma; 4. Technology
Today’s top research idea
- L&T – Focus on complex jobs with high design content; Execution to improve as GST impact tapers off
- Key highlights from our recent meeting with LT management:
- LT is focused on orders with higher design element and more technical complexities, rather than the run-of-the-mill ‘road’ jobs, where competition is intense and margins are thin.
- 1HFY18 saw large orders being delayed/deferred. Although some revival is expected in 3QFY18 (announced orders stand at INR240b till date v/s INR120-130b in 1Q/2QFY18), slippages may continue into FY19.
- Exports: The GCC opportunity basket is down 40% YoY post the fall in oil prices over the past two years. The share of GCC is expected to contract for LT as well (~30% currently). LT is looking at Africa and SE Asia to diversify away from GCC.
- Domestic execution: 2QFY18 execution was impacted by GST, as order books were renegotiated and invoicing was delayed. However, the impact is now tapering off; expect improved execution in 3Q/4QFY18.
- Valuation: We maintain Buy with an SOTP-based TP of INR1, 440 (E&C business at 22x FY20E EPS, to which we add INR450 for subsidiaries).The stock trades at 20x/17x its standalone business (ex. subsidiaries) v/s its historical average of 22x.
Piping hot news
Mukesh’s Jio leads race to buy Anil’s RCom’s assets
- RIL-owned Reliance Jio Infocomm has emerged the front-runner to acquire the assets of debt-ridden Reliance Communications (RCom). RCom has put its spectrum, towers and fibre on the block. If the company’s asset monetisation plans fructify, it would be worth a total of ₹35,000 crore.
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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