​​​
  1. Price target for L&T at Rs 1,416

Price target for L&T at Rs 1,416

According to media reports, a consortium of Larsen & Toubro (L&T), Sojitz and Gayatri have emerged as the lowest bidders for civil construction work of the Iqbalgarh-Vadodara...

By: | Published: February 23, 2016 12:15 AM

According to media reports, a consortium of Larsen & Toubro (L&T), Sojitz and Gayatri have emerged as the lowest bidders for civil construction work of the Iqbalgarh-Vadodara stretch of the Western rail freight corridor, with a bid of Rs 4,700 crore.

If it comes through, this would be L&T’s third win in the Dedicated Freight Corridor project.With the railways planning to complete ordering out of 100% of the Western DFC contracts and 85% of the Eastern DFC contracts in F4Q16, the opportunity size is significant.

This will dovetail into therailways plan to spend $132 billion over F15-19e (see our report, The Next India: Industrials – The Return of the Transportation Behemoth, dated November 25, 2015). With L&T seeing inflows from the DFC and metros (India and MENA), we continue to highlight the company as a significant beneficiary of the opening up of the railway vertical.

We use a relative P/E (relative to the market) methodology to determine the base, bull and bear case scenario values for the company, and then use a probability-weighted method to come to our price target of Rs 1,416 for L&T. To account for our belief that macro environment’s bottom is behind and our view that visibility on capex is improving, we assign a higher probability to our bull case than to our bear case.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top