Hot stock: L&T gains momentum on brokerage upgrade



MUMBAI: Infrastructure and construction major LarsenBSE 2.23 % & Toubro has surged nearly 10 per cent so far in March 2013, after brokerages upgraded the stock to ‘buy’. The stock was beaten down badly in the recent past on concerns of slowdown on global economic activity and margins concerns.

1CLSA has upgraded Larsen and Toubro to ‘buy’ from ‘outperform’. It has set a target price of Rs 1750, and upside of over 18 per cent from current market price. According to the report, opportunity in emerging Middle East market has the potential to bring in some positive surprises in Fy14 orderflow.

The stock ended at Rs 1,496, up 2.2 per cent or Rs 1496.10, on the BSE. It touched a high of Rs 1,507 and a low of Rs 1,460.25 in trade today.

“L&T has been pre-qualified for several large projects in the Middle East transportation sector. The opportunities include Doha metro, Riyadh metro and freight corridor for Etihad rail. Financial bids for some packages have already been submitted. L&T has also been pre-qualified for a large road order in Muscat. We have built in a 25 per cent YoY growth in international orders for FY14 to Rs 187 billion,” the report said.

According to the brokerage, after the recent underperformance, L&T’s core business now trades at 12.5x 1-year forward multiple which is at 33 per cent discount to its long-term average. Potential asset divestitures could be the near-term trigger for the stock.

Goldman Sachs upgraded L&T to ‘buy’ after the stock underperformed recently on concerns over slowing macro resulting in lower orders and margin expectations. The brokerage has set a target price of Rs 1,710 on the stock. More info