Mehabe score: 5 G Factor: 3 Piotski Score: 6 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 6.
Description
Larsen & Toubro is engaged in core, high impact sectors of the economy and its integrated capabilities span the entire spectrum of design to deliver.L&T is major technology, engineering, construction, manufacturing and financial services conglomerate, with global operations. L&T addresses critical needs in key sectors – Hydrocarbon, Infrastructure, Power, Process Industries and Defence – for customers in over 30 countries around the world.(Source : 202003 Annual Report Page No:358)Site:LTMain Symbol:LT
Stock trades at 1501.0, above its 50dma 1472.72. It also trades above its 200dma 1338.8. The stock remains bullish on techicals
The 52 week high is at 1593.00 and the 52week low is at 842.50
Price Chart
P/E Chart
Sales and Margin
Strengths
– has been maintaining a healthy dividend payout of 32.82%
Weakness
– Stock is trading at 2.78 times its book value
-The company has delivered a poor sales growth of 6.10% over past five years.
Competition
– The industry trades at a mean P/E of 13.3x. GE Power trades at the industry’s max P/E of 23.86x. LT trades at a P/E of 15.8x
– Industry’s mean G-Factor is 4.0 while the mean Piotski score is 7.0. LT has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 3.5%. The max 1- month return was given by GMR Infra.: a return of 16.45 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 48088.0 cr compared to Rs 44245.0 cr for period ended Mar 2020, a rise of 8.7%
Operating Profits reported at Rs 8081.0 cr for period ended Mar 2021 vis-vis 7057.0 for period ended Mar 2020 .
Operating Margins expanded 85.5 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 23.44 compared to Rs 17.57 for previous quarter ended Dec 2020 and Rs 22.77 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 135979.0 cr for period ended Mar 2021 vis-vis sales of Rs 145452.0 cr for the period ended Mar 2020, a fall of 7.0%. The 3 year sales cagr stood at 4.3%.
Net Profit reported at Rs 11583.0 cr for period ended Mar 2021 vis-vis sales of Rs 9549.0 cr for the period ended Mar 2020, rising 17.6%.
Company recorded a healthy Net Profit CAGR of 16.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 22844.0 cr for period ended Mar 2021 vis-vis Rs 6694.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 18.0% compared to 16.0% over the last 3 Years. – The stock has given a return of 61% on a 1 Year basis vis-vis a return of 5% over the last 3 Years. – The compounded sales growth on a TTM bassis is -7% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is 39% vis-vis a compounded profit growth of 15% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 22.02% vis-vis 21.11% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 44.29% vis-vis 45.09% for Dec 2020
Conclusion
– has been maintaining a healthy dividend payout of 32.82% – Stock is trading at 2.78 times its book value
-The company has delivered a poor sales growth of 6.10% over past five years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 1472.72 and is trading at 1501.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
