LARSEN & TOUBRO LTD - Quantamental Equity Research

Quantamental Equity Research on LARSEN & TOUBRO LTD | Release: 29 Jan 2019 11:57:49 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:LT and BSE CODE:500510
Last Close:  INR 1300.45
Fair Value:  INR 944.5
Est. Price by Mar 19:  INR 1514.8
Market Capitalization (INR Crs):  182351.74
Industry:  Construction & Engineering
Rating:  BUY
Upside:  16%
Company Profile
L&Ts standalone financials capture the performance of the Infrastructure segment, Power, Heavy Engineering, Electrical & Automation and the Others segment comprising Metallurgical and Material Handling business, a part of Realty business, a part of Hydrocarbon business, part of Shipbuilding business and Construction & Mining Machinery business.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 9% 27% 72%  
EBIT % 23% 34% 58%  
Earnings % 22% 55% 41%  
Book Value %  11% 36% 64%  
Stock Total Return %  20% 17% 113%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 0.00  
(B) FII/FPI 18.78  
(C) DII/Insurance Companies 39.13  
(D) Public holding < 2 lakhs of cap. 19.54  
(E) Others 22.55  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 716 748 571 634 870 1152 825 1130 1352 1515 1764 1992 2178 2358  
Return on Equity 26% 18% 16% 15% 13% 12% 10% 12% 13% 15% 16% 16% 15% 15%  
Price to Earning  18.1 23.2 16.8 16.9 24.6 33.7 27.0 26.2 25.7 22.5 22.5 22.5 22.5 22.5  
EVTI 2.4 2.5 1.9 1.9 2.2 2.6 1.8 2.1 2.4 2.3 2.2 2.2 2.2 2.2  
EVTIFM 18.1 23.2 16.8 16.9 24.6 33.7 27.0 26.2 25.7 22.5 22.5 22.5 22.5 22.5  
Price to Book Value 4.8 4.1 2.7 2.6 3.2 3.9 2.6 3.2 3.4 3.4 3.5 3.6 3.5 3.4  
Debt to Equity  1.2 1.5 1.8 1.9 2.1 2.3 2.0 1.9 1.9 2.1 2.2 2.1 1.9 1.7  
Dividend Yield 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%  
Cash Flow to Firm 2% -12% -11% -3% -4% 1% 16% 5% -1% -2% 0% 2% 5% 6%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales   119,683.16   145,539.26   170,940.00   193,678.27   211,401.67   221,971.75  
EBITDA     21,576.27     26,767.11     31,438.73     35,620.67     38,880.30     40,824.32  
EBIT     19,352.79     24,063.27     28,379.05     32,285.33     35,382.91     37,622.22  
PBT     11,639.16     16,349.64     19,043.00     21,504.50     23,509.62     25,450.84  
NPAT       7,369.86       9,423.66     10,976.07     12,394.84     13,550.56     14,669.44  
Price to Earning             25.71            22.54            22.54            22.54            22.54            22.54  
Price to Book Value              3.41              3.42              3.55              3.56              3.47              3.37  
Debt to Equity               1.94              2.10              2.15              2.11              1.93              1.69  
Return on Equity              0.13              0.15              0.16              0.16              0.15              0.15  
Enterprise Value to Total Income (EVTI)              2.36              2.25              2.24              2.22              2.18              2.17  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            22.63            23.18            22.97            22.68            22.15            21.83  
Price or Est. Share Prices       1,352.35       1,514.80       1,764.35       1,992.45       2,178.25       2,358.15  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT     16,349.64     19,043.00     21,504.50     23,509.62     25,450.84  
Interest       7,713.63       9,336.05     10,780.83     11,873.29     12,171.38  
Depreciation       2,703.84       3,059.68       3,335.34       3,497.39       3,202.10  
Cash Flow Before Tax     26,767.11     31,438.73     35,620.67     38,880.30     40,824.32  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax     17,668.97     20,752.70     23,513.21     25,664.89     26,948.13  
Terminal Cash Flow                                                                                    -     440,144.05  
Total Cash Flow     17,668.97     20,752.70     23,513.21     25,664.89   467,092.18  
Present Value of Cash Flow   298,850.38  
Debt   166,415.68  
Value of Equity   132,434.70  
Fair Value Per Share          944.50  
Equity        182,352
Debt        107,524
Beta Take from Reuters 1.74
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid            7,714
Tax Benefit            2,120
Interest Net of Tax            5,594
Debt        107,524
Cost of Debt 5%
Cost of Equity 20%
Debt Weight 37%
Equity Weight 63%
WACC 15%
Cash Flow of Mar-23 E     26,948.13
Growth 7.3%
Present Value of Terminal Cashflow   440,144.05
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Larsen & Toubro        1,300.45        182,352          401.84            18.36            13.93              1.83            21.04              3.24            21.62              1.94              1.23            12.77            22.98        145,261                 -                 127            11.31            24.22            -8.47            36.16          747.14
   2  Rites           240.05            4,801          116.81            27.26            23.44              0.56              3.12              2.05            12.37                 -                2.29            18.35            17.83            1,893            87.40                 63            39.74          121.96            42.29            59.41                 -  
   3  Engineers India           113.90            7,197            37.02            21.52            22.59              1.51            28.04              3.08            19.90                 -                3.51              7.12              5.61            2,971            52.02               198            18.85            58.80            12.87          -17.96            69.09
   4  Techno Elec.Engg           243.65            2,746          108.53                 -              26.06              1.86              9.68              2.24            13.71              0.05                 -                   -              52.66            1,254            58.75                 50                 -                   -                   -                   -                   -  
   5  Technofab Engg.           125.15               131          268.54              8.00            13.61              0.34              6.01              0.47              8.36              0.37                 -                8.00              7.09               447            35.15                 68              6.09            42.27          145.56            62.50          300.75
   6  BGR Energy Sys.             53.25               384          176.67                 -              10.26                 -                   -                0.30            27.47              1.75                 -                   -                   -                   -              75.00                 -                   -                   -                   -                   -              81.48

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