MOSL: Morning India (29/May/18): 1. Automobiles; 2. Larsen & Toubro; 3. NTPC; 4. Piramal Enterprises; 5. NMDC; 6. Aurobindo Pharma; 7. NHPC; 8. Oil India; 9. Manpasand Beverages; 10. Bank of India
MOrning India (29/May/18): 1. Automobiles; 2. Larsen & Toubro; 3. NTPC; 4. Piramal Enterprises; 5. NMDC; 6. Aurobindo Pharma; 7. NHPC; 8. Oil India; 9. Manpasand Beverages; 10. Bank of India
Today’s top research idea
Larsen & Toubro: Strong revival in domestic E&C execution
- L&T's 4QFY18 revenues increased 11% YoY to INR407b, in line with our estimate of INR412b. Adj. EBITDA stood at INR51.3b (+17% YoY) was in line with our estimate. Reported EBITDA of INR54b (+22% YoY) includes a) Profit on sale of land in Bangalore of INR4.8b, and b) INR2.2b of provision on Nabha Power receivables.
- E&C sales were up 15% YoY with domestic E&C up 19% (Domestic Infra segment +25% YoY). Core E&C segment margin stood at 12.3% (- 60bps YoY) on a fall in margins in Hydrocarbons (6.1%,-370bps YoY) and Heavy Engineering (18.1%, -950bps YoY) as projects did not reach margin recognition threshold. Adj. PAT at INR31b was ahead of our estimate of INR27.3b. NWC fell to 19.5% of sales in Q418 (21.5% in Q318) despite strong domestic execution, which entails higher working capital. Maintain Buy with a SOTP of INR1650(24x standalone FY20 EPS).
Piping hot news
Rupee, bonds hit two-week highs as oil prices, geopolitical tension ease
- The Indian rupee and 10-year bond prices on Monday closed at two-week highs as falling crude oil prices ease inflation and trade deficit worries. The home currency ended at 67.43 against the US dollar—a level last seen on 11 May, up 0.51% from its previous close of 67.77.
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