L&T_Angel_180111[1]

8/7/2019 L&T_Angel_180111[1]

http://slidepdf.com/reader/full/ltangel1801111 1/14

Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 3QFY11 3QFY10 2QFY11 % chg (yoy) % chg (qoq)

Net Sales 11,413 8,122 9,331 40.5 22.3

Op. Profit 1,238 998 1,006 24.0 23.1

Net Profit 841 759 765 10.8 9.9

Source: Company, Angel Research

Larsen and Toubro (L&T) posted mixed set of numbers for 3QFY2011. On the

order book front, as on 3QFY2011 L&T had an order backlog of ` 1,14,882cr

while order inflow was disappointing at ` 13,366cr (25% yoy decline). The

company has maintained its revenue guidance of 20% for the full year, which webelieve is achievable. However, according to us L&T would find it tough to meet

its guidance of 25% on the order inflow front (implying order inflow of ` 37,509cr,

a 57% yoy jump) for the year, and there could see some slippage.

Top-line above estimates, margins tad below bottom-line ahead of estimates:

L&T reported robust top-line growth of 40.5% yoy to ` 11,413cr ( ` 8,122cr), above

our estimate of ` 10,202cr, mainly on account of pick up in E&C segment which

recorded 45% yoy growth in top-line to ` 9,831cr. EBITDA came in below our

expectations mainly on account of the higher-than-anticipated material cost

owing to increase in commodity prices. Thus, EBITDA margin stood at 10.8% v/s

our expectation of 11.3%. Adjusting for extraordinary income ( ` 35.3cr) and

dividend from subsidiaries, bottom-line grew 29.8% to ` 796.7cr and surpassedour estimate of ` 720cr.

Outlook and Valuation: L&T has a healthy order book, which provides revenue

visibility for the next few years. We believe that even if the company misses its

inflow guidance of 25% for the year, sluggish order inflow is not a long-term

concern. Management also indicated delays rather than major cancellation of

orders, which it expects to make good in the ensuing quarters. Thus, post the

recent correction of ~20%, we believe that it is a good opportunity for long-term

investors to enter the stock at current levels. We recommend a Buy on the stock,

with a Target Price of ` 1,964.

Key Financials (Standalone)Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E

Net Sales 33,926 37,035 44,267 56,039

% chg 36.4 9.2 19.5 26.6

Adj. Net Profit 2,595 2,893 3,297 4,148

% chg 32.4 11.5 14.0 25.8

FDEPS (`) 42.4 47.3 53.9 67.8

EBITDA Margin (%) 11.4 12.9 12.1 12.0

P/E (x) 39.6 35.5 31.2 24.8

RoAE (%) 23.6 18.8 16.4 17.6

RoACE (%) 22.0 19.7 16.8 17.5

P/BV (x) 8.3 5.6 4.7 4.1

EV/Sales (x) 3.2 3.0 2.5 2.0

EV/EBITDA (x) 28.3 22.8 20.9 16.8


BUYCMP ` 1,680

Target Price ` 1,964

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 0.0

MF / Banks / Indian Fls 43.5

FII / NRIs / OCBs 21.3

Indian Public / Others 35.2

Abs. (%) 3m 1yr 3yr

Sensex (6.2) 7.6 (4.2)

LNT (15.5) 1.8 (17.5)

Face Value ( ` )

BSE Sensex

Nifty

Reuters Code

102,887

0.95

2,212/1,371

233,208

Infrastructure

Avg. Daily Volume

Market Cap ( ` cr)

Beta

52 Week High / Low

2

18,882

5,655

LART.BO

LT@IN

Shailesh Kanani

022-39357800 Ext:6829

[email protected]

Nitin Arora

022-39357800 Ext:6842

[email protected]

Larsen & Toubro

Performance Highlights

3QFY2011 Result Update | Infrastructure

January 17, 2011

8/7/2019 L&T_Angel_180111[1]


Larsen & Toubro | 3QFY2011 Result Update

January 17, 2011 2

Exhibit 1: 3QFY2011 performance (standalone)

Y/E March (` cr) 3QFY11 3QFY10 2QFY11 % chg (yoy) % chg (qoq) 9MFY11 9MFY10 % chg

Net Sales 11,413 8,122 9,331 40.5 22.3 28,629 23,449 22.1

Total Expenditure 10,175 7,124 8,325 42.8 22.225,379 20,787 22.1Operating Profit 1,238 998 1,006 24.0 23.1 3,251 2,662 22.1

OPM (%) 10.8 12.3 10.8 (144.1)bp 6.8bp 11.4 11.4

Interest 176 125 193 40.5 (9.0)511 360 41.9

Depreciation 128 105 121 22.6 5.7363 298 21.8

Non Operating Income 219 148 279 48.5 (21.5)675 577 17.0

Extraordinary/Dividend from Subs 63 149 174 (57.4) (63.6) 287 1,207

Profit Before tax 1,217 1,065 1,144 14.3 6.3 3,338 3,787 (11.8)

Tax 376 306 379 23.0 (0.9)1,066 849 25.5

Reported Net Profit 840.5 758.8 765.0 10.8 9.9 2,272 2,937 (22.7)

PAT (%) 7.4 9.3 8.2 7.9 12.5

Reported EPS 13.7 12.7 12.5 8.0 9.9 37.3 49.9 (25.3)

Adjusted Profit After Tax 796.7 613.7 650.2 29.8 22.52,079 1,954 6.4

Adj. PAT (%) 7.0 7.6 7.0 7.3 8.3

Adj. FDEPS (`) 13.0 10.0 10.6 29.8 22.5 34.0 31.9 6.4


Exhibit 2: Segmental performance

Y/E March (` cr) 3QFY11 3QFY10 2QFY11 % chg (yoy) % chg (qoq)

Revenues 11,510 8,190 9,412 40.5

Engg & Const. (E&C) 10,004 6,998 8,015 43.0

Mach. & Ind. Products (MIP) 681 591 698 15.2 (2.5)

Electrical & Electronics (E&E) 795 721 672 10.2 18.2

Others 168 95 160 76.3 5.3

Intersegment revenue 138 216 133 (35.9) 3.9

EBIT 1,292 1,069 1,117 20.8

Engg & Const. 1,065 855 900 24.5

Mach. & Ind. Products 129 121 116 6.6 11.2

Electrical & Electronics 87 87 87 (0.6) (0.1)

Others 21 21 17 4.5

Intersegment margins 10 15 3 0.0 217.2

Capital Employed 28,960 25,455 27,749 13.8 4.4

Engg & Const. 7,029 6,669 7,334 5.4 (4.2)

Mach. & Ind. Products 328 176 272 86.2 20.4

Electrical & Electronics 1,204 1,102 1,157 9.2 4.0

Others 210 183 223 14.6 (5.7)

Unallocable 20,189 17,324 18,763 16.5 7.6


8/7/2019 L&T_Angel_180111[1]



January 17, 2011 3

Exhibit 3: 3QFY11 Actual v/s Estimates

Estimates Actual Variation (%)

Net Sales 10,202 11,413 11.9

OPM (%) 11.3 10.8 (45.4)bp

PAT 720.0 796.7 10.7


Top-line above estimates… L&T reported a robust top-line growth of 40.5% yoy to

` 11,413cr ( ` 8,122cr) for the quarter, which was above our estimate of ` 10,202cr

mainly on account of the pick up in the E&C segment, which recorded 45% jump

in top-line to ` 9,831cr. The BTG segment has also started contributing to

revenues. The MIP segment posted decent yoy top-line growth of ~15% led by

increased off-take in the industrial valves and mining and construction equipment

business. The E&E segment sales came in below expectations and posted a yoy

growth of ~11% mainly on account of deferment of orders in the engineered-to-

order-business.

…but order inflow disappoints: During the quarter, the company knocked off slow-

moving orders of ` 2,000cr from its order book. These pertain to some real estate

projects – Godrej and Nesco. Thus, order inflow during 3QFY2011 stood at

` 13,366, down 24.9% yoy. Management highlighted that order inflows were

impacted by the delays in the tendering process (environmental approvals/land

acquisition, etc), political issues, etc. Going ahead, management stated that there

several order finalisations were coming up in March 2011. The Hyderabad metro

order ( ` 15,000cr) is also expected to achieve financial closure in March. However,

a delay of one-two months could impact their 25% growth guidance for FY2011.

Management highlighted that order booking depends on completion of basic

engineering post which it would materialise only in FY2012. The KPCL (2x800MW)

power plant MoU is also expected to get converted only in FY2012.

Exhibit 4: Execution picking up...


Exhibit 5: ...but, order inflow disappointing


39.835.0

25.3

7.3 3.0

(5.7)

28.1 26.0

17.8

40.5

(10.0)

-

10.0

20.0

30.0

40.0

50.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

Sales ( ` cr, LHS) Growth (yoy %, RHS)

65.2

14.3

139.5

(21.8)

47.5

23.4

(16.9)

63.3

11.4

(24.9)

(40.0)

(20.0)

-

20.040.0

60.0

80.0

100.0

120.0

140.0

160.0

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

Order Booking (` cr, LHS) Growth (yoy %, RHS)

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 4

EBITDA margins a concern: On the EBITDA front, the company reported lower-

than-expected performance primarily on account of the higher-than-anticipated

material costs owing to increase in the commodity prices (copper and silver).

Therefore, the company reported EBITDA margin of 10.8% v/s our expectation of11.3%. Management indicated that margins were also impacted with some power

projects not reaching the margin recognition threshold levels. Going ahead, we

believe that margins would be under pressure given the rising trend in the

commodity prices. Hence, we believe that the company has achieved peak

margins in FY2010. On the bottom-line front, the company reported yoy growth of

10.8%. Adjusting for extraordinary income ( ` 35.3cr) and dividend from

subsidiaries, bottom-line grew 29.8% yoy to ` 796.7cr.

Exhibit 6: EBITDA margins below expectations


Exhibit 7: Lower EBITDA margins impact net margins


Subsidiary performance

L&T InfoTech registers decent performance

The technology subsidiary, L&T InfoTech, reported a decent performance for

3QFY2011 reporting 18.0% yoy and 2.7% qoq growth in revenues. On the

profitability front, the subsidiary reported NPM at 12.1%. For 9MFY2011, the

company recorded 21.7% yoy revenue growth and 100bp improvement in NPM

on the back of effective cost controls and better utilisation.

The numbers of the finance subsidiaries were not announced given the SEBI norms

as the DRHP has been filed.

Exhibit 8: Subsidiary performance

3QFY11 3QFY10 2QFY11 % chg (yoy) % chg (qoq)

Revenues

L&T InfoTech 604.0 512.0 588.0 18.0 2.7

PAT

L&T InfoTech 73.0 57.0 78.0 28.1 (6.


8.8 9.1

15.0

11.2 10.612.3

15.1

10.8 10.8 10.8

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0

500

1,000

1,500

2,000

2,500

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

EBITDA (Rs cr, LHS) EBITDAM (%, RHS)

6.0

8.8

10.4

7.67.0

7.6

10.0

8.2 8.27.4

-

2.0

4.0

6.0

8.0

10.0

12.0

0

200

400

600

800

1,000

1,200

1,400

1,600

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

P AT ( Rs cr, LHS) PAT M (%, RHS)

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 5

Order book analysis

L&T registered disappointing order inflow of ` 13,366cr during 3QFY2011. Orders

to the tune of ~88% for 9MFY2011 came from the local market, taking the

company’s outstanding order book to ` 1,14,882cr. L&T’s order book is majorly

dominated by the power (37%) and infrastructure (32%) segments. Process (11%),

hydrocarbon (14%) and others (6%) constitute the balance part of the order book.

Export orders witnessed some pick up especially in the T&D space and contribution

to the 9MFY2011 order inflow was 12% (majorly from the Middle East).

The company has maintained its yearly order booking guidance of 25%. However,

the task seems to be tough as the 25% guidance for the year implies order inflow

of ` 37,509cr, a 57% yoy jump. Hence, we believe there are chances of slippage

on the order inflow front.

Exhibit 9: Order booking trend


Exhibit 10: Order book composition


Client-wise, 46% of L&T’s outstanding order book comes from the public sector,

with 40% coming from the private sector, and captive work orders accounting for

the balance 14%. Notably, there has been a drop in the share of public sector,

which management has cited as not being a concern and guided to see a revival

in the ensuing quarters.

12,45314,417

12,517

9,571

18,365 17,793

23,843

15,626

20,464

13,366

-

5,000

10,000

15,000

20,000

25,000

30,000

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

Process Hydrocarbon Power Infrastructure Others Total

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2 Q F Y 0 9

3 Q F Y 0 9

4 Q F Y 0 9

1 Q F Y 1 0

2 Q F Y 1 0

3 Q F Y 1 0

4 Q F Y 1 0

1 Q F Y 1 1

2 Q F Y 1 1

3 Q F Y 1 1

Process Hydrocarbon Power Infrastructure Others

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 6

Outlook and Valuation: Post the recent slide, we recommend a Buy

The macro outlook for infrastructure in general, and the consequent benefits for

L&T in terms of order inflows in particular, remain strong. We believe that the

company will continue to occupy a unique position in the Indian engineering and

construction (E&C) space as a diversified and large engineering play, with

exposure to areas ranging from power, defence, nuclear to equipment.

Exhibit 11: Change in estimates

FY2011 FY2012

Earlier Estimates Revised Estimates Variation % Earlier Estimates Revised Estimates Variation %

Revenues 44,267 44,267 - 55,453 56,039 1.1

EBITDA Margin 12.1 12.1 - 12.3 12.0 (29.4)

PAT 3,297 3,297 - 4,289 4,148 (3.3)


At the CMP of ` 1,680, the stock is trading at 24.8x FY2012E earnings and 4.1x

FY2012E P/BV, on a standalone basis. We have used the sum-of-the-parts (SOTP)

methodology to value the company to capture all its business initiatives and

investments/stakes in the different businesses. Ascribing separate values to its

parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and

MCap basis, our fair value works out to ` 1,964, which provides 16.8% upside

from current levels. We recommend a Buy on the stock.

It may be noted here that the L&T stock has historically traded at a premium to the

BSE Sensex. At our SOTP Target Price, the stock would trade at 29.0x FY2012Estandalone EPS of ` 67.8, which is at a premium of ~70% over Angel’s FY2012E

Sensex Target P/E multiple of 17x.

Exhibit 12: L&T - Parent historic P/E multiple premium to BSE Sensex


-10%

10%

30%

50%

70%

90%

110%

130%

150%

1 5 - O c t - 0 3

1 5 - J an- 0 4

1 5 -A pr - 0 4

1 5 - J ul - 0 4

1 5 - O c t - 0 4

1 5 - J an- 0 5

1 5 -A pr - 0 5

1 5 - J ul - 0 5

1 5 - O c t - 0 5

1 5 - J an- 0 6

1 5 -A pr - 0 6

1 5 - J ul - 0 6

1 5 - O c t - 0 6

1 5 - J an- 0 7

1 5 -A pr - 0 7

1 5 - J ul - 0 7

1 5 - O c t - 0 7

1 5 - J an- 0 8

1 5 -A pr - 0 8

1 5 - J ul - 0 8

1 5 - O c t - 0 8

1 5 - J an- 0 9

1 5 -A pr - 0 9

1 5 - J ul - 0 9

1 5 - O c t - 0 9

1 5 - J an-1 0

1 5 -A pr -1 0

1 5 - J ul -1 0

1 5 - O c t -1 0

1 5 - J an-1 1

L&T Premium/(Discount) to Sensex 7YEAR AVG 5YEAR AVG 3YEAR AVG

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 7

On one-year forward P/E basis, historically L&T has traded at an average P/E

of 26.6x, 29.4x and 28.6x over the past seven, five and three years,

respectively. Thus, our implied target P/E multiple of 29.0x is in line with its

historical average.Exhibit 13: L&T - Parent 1-year forward P/E band


Exhibit 14: Derivation of SOTP-based Target Price for L&T (FY2012E)

Business Segment Methodology Remarks ` cr `/share % to TP

L&T- Parent P/E 22x FY2012E Earnings 91,258 1,491 75.9

Infrastructure Subsidiries 8,063 132 6.7

IDPL (stake - 86%) P/BV 2.5x FY2012E Book value 8,063 132 6.7

Key Subsidiaries - Services 12,738 208 10.6

L&T Infotech P/E 14x FY2012E Earnings 5,110 83 4.3

L&T Finance P/BV 2.5x FY2012E Book value 4,495 73 3.7

L&T Infrastructure Finance P/BV 2.5x FY2012E Book value 3,134 51 2.6

Key Subsidiaries - Manufacturing 5,799 95 4.8

Tractor Engineers P/E 12x FY2012E Earnings 176 3 0.1

Associate Companies P/E 12x FY2012E Earnings 2,200 36 1.

L&T MHI Boilers and Turbines (stake - 51%) P/E 16x FY2012E Earnings 3,422 56 2.8

Other Subsidiaries 2,321 38 1.9

Satyam Stake Mcap 20% holding company discount 160 3 0.1

Other Investments P/BV 1x FY2012E Book Value 2,161 35 1.8

Total 120,179 1,964 100


Exhibit 15: Key assumptions (` cr)

FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Order Inflow 30,600 42,020 51,600 69,572 79,604 96,716

Revenues 17,605 24,878 33,926 37,035 44,267 56,039

Order Backlog (Y/E) 36,900 52,680 70,300 91,775 120,697 179,663

OB/Sales (x) 2.1 2.1 2.1 2.5 2.7 3.2


0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1 5 - O c t - 0 3

1 5 - J an- 0 4

1 5 -A pr - 0 4

1 5 - J ul - 0 4

1 5 - O c t - 0 4

1 5 - J an- 0 5

1 5 -A pr - 0 5

1 5 - J ul - 0 5

1 5 - O c t - 0 5

1 5 - J an- 0 6

1 5 -A pr - 0 6

1 5 - J ul - 0 6

1 5 - O c t - 0 6

1 5 - J an- 0 7

1 5 -A pr - 0 7

1 5 - J ul - 0 7

1 5 - O c t - 0 7

1 5 - J an- 0 8

1 5 -A pr - 0 8

1 5 - J ul - 0 8

1 5 - O c t - 0 8

1 5 - J an- 0 9

1 5 -A pr - 0 9

1 5 - J ul - 0 9

1 5 - O c t - 0 9

1 5 - J an-1 0

1 5 -A pr -1 0

1 5 - J ul -1 0

1 5 - O c t -1 0

1 5 - J an-1 1

P/E 7YEAR AVG 5YEAR AVG 3YEAR AVG

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 8

Exhibit 16: Angel EPS forecast v/s consensus

Angel Forecast Bloomberg Consensus Variation (%)

FY2011E 53.9 63.0 16.9

FY2012E 67.8 77.2 13.9


Investment Arguments

Proxy to India's infra story: We believe that L&T is in an enviable position, given the

apparent shortage of good quality constructors in India. It is in a position to

choose its contracts and negotiate for price variation clauses. L&T's strong balance

sheet, a sound execution engine, wide array of capabilities, integrated operations

tailored to suit India's infrastructure growth story and multiple, recurring value-unlocking triggers over the medium term, lead us to place faith in this default India

infrastructure story. L&T has an order book of > ` 1trillon, lending revenue visibility.

With signs of pick up in execution, management has guided for an improving

scenario and we also believe that most of the pieces are falling into place for the

company.

Well-capitalised balance sheet funding the expansion: L&T has a well-capitalised

balance sheet, at a debt-equity ratio of 0.4x as of 9MFY2011, in spite of having a

strong portfolio of assets and having invested in future growth areas. We believe

that the key factors for the same are: 1) high margins, and 2) better working

capital management.

Great infusion-dilution opportunity: Investment in the construction segment is

expected to double over the Eleventh Plan period, and the PPP model is assuming

greater significance in delivering and meeting physical targets in the different

segments of the Infrastructure space. The government, through Regulatory

changes, is focusing on the construction segment through the PPP mode of

investment. It expects the PPP share in the Eleventh Plan to be 30%, as against a

mere 19.8% in the Tenth Plan. This has become imperative due to the widening

gap between the demand for infrastructure and financial resources available with

the government to fund the same. Given the high growth opportunities present in

L&T's varied business verticals (Infrastructure and Finance), we feel that thecompany provides a great infusion-dilution opportunity. It should be noted that

such moves lead to short-term dilution in equity, leading to the EPS getting

temporarily depressed. However, it also shores up the net worth of the company,

which fuels its future growth. Further, it also serves as a benchmark for valuing the

entity.

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 9

Exhibit 17: Recommendation summary

Company CMP TP Rating Top-line (` cr) EPS (`) Adj. P/E OB/

FY10 FY11E FY12E CAGR (%) FY10 FY11E FY12E CAGR (%) FY10 FY11E FY12E Sales(x)

CCCL 52 80 Buy 1,976 2,397 2,859 20.3 5.0 5.0 6.7 15.9 10.5 10.4 7.8 1.9

HCC 41 59 Buy 3,629 4,154 5,135 19.0 1.3 1.6 1.8 16.7 3.0 2.6 2.2 4.8

IRB Infra 209 265 Buy 1,705 2,891 3,715 47.6 11.6 15.2 15.9 16.9 5.9 4.5 4.4 -

IVRCL 106 181 Buy 5,492 6,493 8,071 21.2 7.8 8.8 10.9 18.2 7.4 6.6 5.3 3.7

JP Assoc. 88 160 Buy 10,355 14,475 18,643 34.2 4.7 5.3 8.2 33.0 19.0 16.6 10.8 -

Punj Lloyd 98 153 Buy 10,448 9,118 12,371 8.8 (10.9) 5.1 10.9 - - 19.4 9.0 3.1

NCC 113 196 Buy 4,778 5,540 6,418 15.9 7.8 8.5 10.0 13.2 7.3 6.7 5.7 2.9

Sadbhav 104 170 Buy 1,257 1,665 2,197 32.2 3.9 7.0 8.2 44.3 4.1 2.3 2.0 5.5

Simplex In. 369 573 Buy 4,564 5,258 6,168 16.2 25.6 30.3 37.2 20.6 14.4 12.2 9.9 2.9

Patel Engg 253 565 Buy 3,191 3,693 4,297 16.0 28.4 30.8 32.7 7.4 5.1 4.7 4.5 2.3

Madhucon 104 173 Buy 1,388 1,763 2,197 25.8 6.2 7.3 9.2 22.0 3.7 3.1 2.5 2.6

L&T 1,680 1,964 Buy 37,035 44,267 56,039 23.0 47.3 53.9 67.8 19.7 25.3 22.2 17.7 2.6

ITNL 261 358 Buy 2,403 3,480 6,071 59.0 17.7 21.8 25.9 20.8 14.7 11.9 10.1 6.6


Exhibit 18: SOTP break up

Company Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total

` % to TP ` % to TP ` % to TP ` % to TP ` % to TP ` CCCL 80 100 - - - - - - - - 80

HCC 22 37 29 49 8 14 - - - - 59

IRB Infra 125 47 - - 135 51 5 2 - - 265

IVRCL 133 73 - - - - 48 27 2 1 181

JP Assoc. 79 49 39 25 - - - - 43 27 160

Punj Lloyd 153 100 - - - - - - - - 153

NCC 135 69 7 4 31 16 - - 23 12 196

Sadbhav 82 48 - - 88 52 - - - - 170

Simplex In. 573 100 - - - - - - - - 573

Patel Engg 458 81 56 10 16 3 - - 36 6 565

Madhucon 92 53 4 2 52 30 - - 25 15 173

L&T 1,491 76 - - - - 473 24 - - 1,964

ITNL 159 44 - - 151 42 - - 48 13 358


8/7/2019 L&T_Angel_180111[1]



January 17, 2011 10

Profit & loss statement (Standalone)

Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Net Sales 17,567 24,855 33,647 36,675 43,856 55,600

Other operating income 38 23 280 360 412 440

Total operating income 17,605 24,878 33,926 37,035 44,267 56,039

% chg 19.2 41.3 36.4 9.2 19.5 26.6

Total Expenditure 15,825 22,051 30,094 32,295 38,946 49,391

Net Raw Materials 8,782 12,963 16,798 17,309 21,470 27,500

Other Mfg costs 4,755 6,168 9,434 11,144 12,483 15,568

Personnel 1,259 1,535 1,998 2,379 2,784 3,336

Other 1,028 1,386 1,864 1,463 2,209 2,987

EBITDA 1,780 2,826 3,832 4,739 5,321 6,648

% chg 58.8 35.6 23.7 12.3 24.9

(% of Net Sales) 10.1 11.4 11.4 12.9 12.1 12.0Depreciation& Amortisation 168 202 283 380 506 625

EBIT 1,612 2,624 3,550 4,360 4,815 6,023

% chg 62.8 35.3 22.8 10.4 25.1

(% of Net Sales) 9.2 10.6 10.5 11.9 11.0 10.8

Interest & other Charges 93 123 350 505 825 1,040

Other Income (incl pft from Ass/JV) 454 488 643 768 1,197 1,539

(% of PBT) 23.0 16.3 16.7 16.6 23.1 23.6

Recurring PBT 1,973 2,989 3,842 4,623 5,187 6,523

% chg 51.5 28.5 20.3 12.2 25.8

Extraordinary Expense/(Inc.) (32) (166) (871) (1,394) - -

PBT (reported) 2,005 3,155 4,713 6,016 5,187 6,523

Tax 602 982 1,231 1,641 1,712 2,153

(% of PBT) 30.0 31.1 26.1 27.3 33.0 33.0

PAT (reported) 1,403 2,173 3,482 4,376 3,475 4,370

Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 1,403 2,173 3,482 4,376 3,475 4,370

ADJ. PAT 1,330 1,960 2,595 2,893 3,297 4,148

% chg 66.7 47.5 32.4 11.5 14.0 25.8

(% of Net Sales) 7.6 7.9 7.7 7.9 7.5 7.5

Basic EPS (`) (Reported) 49.5 74.3 59.2 72.6 56.8 71.4

Fully Diluted EPS (̀ ) (Diluted) 21.7 32.0 42.4 47.3 53.9 67.8

% chg 47.5 32.4 11.5 14.0 25.8

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 11

Balance sheet (Standalone)


SOURCES OF FUNDS

Equity Share Capital 56.7 58.5 117.5 120.5 122.4 122.4Preference Capital - - - - - -

Reserves& Surplus 5,712 9,497 12,343 18,191 21,736 25,179

Shareholder’s Funds 5,768 9,555 12,460 18,312 21,858 25,301

Minority Interest - - - - - -

Total Loans 2,078 3,584 6,556 6,801 10,308 11,243

Deferred Tax Liability 40.2 61.4 48.5 77.4 77.4 77.4

Total Liabilities 7,886 13,200 19,065 25,190 32,244 36,622

APPLICATION OF FUNDS

Gross Block 2,876 4,189 5,575 7,236 8,914 11,049

Less: Acc. Depreciation 1,087 1,239 1,418 1,728 2,234 2,859

Net Block 1,789 2,950 4,157 5,508 6,680 8,190

Capital Work-in-Progress 436 696 1,038 858 1,029 1,235

Goodwill - - - - - -

Investments 3,104 6,922 8,264 13,705 14,705 15,705

Current Assets 11,904 16,314 23,448 26,362 34,683 42,824

Cash 1,094 964 775 1,432 1,707 2,169

Loans & Advances 2,277 3,664 6,791 5,997 10,309 12,283

Other 8,532 11,685 15,882 18,932 22,667 28,372

Current liabilities 9,356 13,684 17,842 21,243 24,854 31,332

Net Current Assets 2,547 2,630 5,606 5,119 9,829 11,492

Mis. Exp. not written off 9.8 3.1 0.3 - - -

Total Assets 7,886 13,200 19,064 25,190 32,244 36,622

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 12

Cash flow statement (Standalone)


Profit before tax 2,005 3,155 4,713 5,881 5,187 6,523

Depreciation 168 202 283 387 506 625

Change in Working Capital (706) 377 2,049 (1,143) 4,435 1,201

Less: Other income 454 488 643 768 1,197 1,539

Direct taxes paid 604 988 873 1,519 1,712 2,153

Cash Flow from Operations 1,821 1,505 1,431 5,124 (1,651) 2,255

(Inc.)/ Dec. in Fixed Assets (775) (1,622) (1,980) (1,481) (1,850) (2,340)

(Inc.)/ Dec. in Investments (1,073) (3,620) (1,329) (5,442) (1,000) (1,000)

Other income 454 488 643 768 1,197 1,539

Cash Flow from Investing (1,394) (4,754) (2,666) (6,154) (1,653) (1,801)

Issue of Equity 24 1,702 23 2,133 953 -

Inc./(Dec.) in loans 739 1,560 1,922 168 3,507 935Dividend Paid (Incl. Tax) 619 114 439 719 881 925

Others (60) (28) (461) 105 - (3)

Cash Flow from Financing 84 3,119 1,045 1,687 3,579 7

Inc./(Dec.) in Cash 511 (130) (190) 656 275 462

Opening Cash balances 583 1,095 965 775 1,432 1,707

Closing Cash balances 1,095 965 775 1,432 1,707 2,169

8/7/2019 L&T_Angel_180111[1]



January 17, 2011 13

Key Ratios

Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation Ratio (x)

P/E (on FDEPS) 77.3 52.4 39.6 35.5 31.2 24.8P/CEPS 80.3 55.6 41.8 36.7 31.6 25.2

P/BV 17.8 10.8 8.3 5.6 4.7 4.1

Dividend yield (%) 0.6 0.7 0.5 0.6 0.7 0.7

EV/Sales 5.9 4.2 3.2 3.0 2.5 2.0

EV/EBITDA 58.3 37.3 28.3 22.8 20.9 16.8

EV / Total Assets 13.2 8.0 5.7 4.3 3.5 3.1

Order Book to Sales 2.1 2.1 2.1 2.5 2.8 3.2

Per Share Data (`)

EPS (Basic) 49.5 74.3 59.2 72.6 56.8 71.4

EPS (fully diluted) 21.7 32.0 42.4 47.3 53.9 67.8

Cash EPS 24.5 35.3 47.0 53.5 62.1 78.0

DPS 10.7 12.6 8.4 10.2 12.3 12.3

Book Value 94.2 156.1 203.6 299.2 357.1 413.4

DuPont Analysis

EBIT margin 9.2 10.5 10.5 11.8 10.9 10.7

Tax retention ratio 0.7 0.7 0.7 0.7 0.7 0.7

Asset turnover (x) 2.6 2.6 2.2 1.8 1.6 1.7

ROIC (Post-tax) 16.6 19.0 17.2 15.1 11.9 12.4

Cost of Debt (Post Tax) 3.1 3.0 5.1 5.5 6.5 6.5

Leverage (x) 0.2 0.2 0.4 0.4 0.3 0.4

Operating ROE 18.9 22.8 21.8 18.6 13.8 14.7

Returns (%)

ROCE (Pre-tax) 20.4 24.9 22.0 19.7 16.8 17.5

Angel ROIC (Pre-tax) 23.7 27.6 23.3 20.7 17.7 18.5

ROAE 23.0 25.6 23.6 18.8 16.4 17.6

Turnover ratios (x)

Asset Turnover (Gross Block) 6.1 7.0 6.9 5.8 5.5 5.6

Inventory / Sales (days) 54 54 54 36 13 13

Receivables (days) 107 94 94 105 101 98

Payables (days) 61 60 63 73 79 72

Working capital cycle (ex-cash) 36 23 35 42 49 57Solvency ratios (x)

Net debt to equity 0.2 0.3 0.5 0.3 0.4 0.4

Net debt to EBITDA 0.6 0.9 1.5 1.1 1.6 1.4

Interest Coverage 17.3 21.4 10.1 8.6 5.8 5.8

8/7/2019 L&T_Angel_180111[1]



Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .

Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment positions in the stocks recommended in this report.

Disclosure of Interest Statement L&T

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock Yes

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Date post:	09-Apr-2018
Category:	Documents
Upload:	rajpersonal
View:	217 times
Download:	0 times

L&T_Angel_180111[1]

Documents