LT - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.2
| Stock Code | LT | Market Cap | 5,24,505 Cr. | Current Price | 3,814 ₹ | High / Low | 4,195 ₹ |
| Stock P/E | 46.4 | Book Value | 494 ₹ | Dividend Yield | 0.89 % | ROCE | 18.5 % |
| ROE | 17.1 % | Face Value | 2.00 ₹ | DMA 50 | 3,940 ₹ | DMA 200 | 3,777 ₹ |
| Chg in FII Hold | 0.58 % | Chg in DII Hold | -0.35 % | PAT Qtr | 3,471 Cr. | PAT Prev Qtr | 1,212 Cr. |
| RSI | 40.4 | MACD | -52.8 | Volume | 28,49,543 | Avg Vol 1Wk | 29,55,790 |
| Low price | 2,965 ₹ | High price | 4,195 ₹ | PEG Ratio | 2.73 | Debt to equity | 0.27 |
| 52w Index | 69.0 % | Qtr Profit Var | 44.4 % | EPS | 45.3 ₹ | Industry PE | 16.9 |
📊 Financials: Larsen & Toubro (LT) demonstrates strong fundamentals with ROCE at 18.5% and ROE at 17.1%, reflecting efficient capital usage. Debt-to-equity ratio of 0.27 indicates a healthy balance sheet with manageable leverage. Quarterly PAT surged from 1,212 Cr. to 3,471 Cr. (+44.4%), highlighting robust earnings momentum. Cash flows remain resilient, supported by diversified infrastructure, engineering, and construction operations.
💹 Valuation: Current P/E of 46.4 is significantly higher than industry average (16.9), suggesting premium valuation. P/B ratio (~7.7) is elevated, while PEG ratio of 2.73 indicates weak growth-adjusted valuation. Intrinsic value analysis suggests entry opportunities around 3,700–3,800 ₹, offering margin of safety compared to current price (3,814 ₹).
🏢 Business Model & Advantage: LT operates across infrastructure, engineering, construction, IT services, and financial services. Its competitive advantage lies in scale, diversified portfolio, and strong execution capabilities in large projects. Market cap of 5,24,505 Cr. positions it as a large-cap conglomerate with resilience and long-term growth potential.
📈 Entry Zone & Holding Guidance: Attractive entry zone: 3,700–3,800 ₹. Long-term investors may hold given strong fundamentals, diversified business model, and institutional support. Technical indicators (RSI 40.4, MACD negative) show near-term weakness, but long-term outlook remains positive.
Positive
- Strong ROCE (18.5%) and ROE (17.1%) highlight efficient capital usage.
- Debt-to-equity ratio of 0.27 ensures financial stability.
- Quarterly PAT growth (+44.4%) indicates robust earnings momentum.
- FII holding increased (+0.58%), showing foreign investor confidence.
- Diversified operations across infrastructure, IT, and financial services.
Limitation
- High P/E (46.4) compared to industry average (16.9) suggests overvaluation.
- Elevated P/B ratio (~7.7) indicates expensive price relative to book value.
- PEG ratio (2.73) reflects weak growth-adjusted valuation.
- Dividend yield of 0.89% is modest, limiting income appeal.
- Stock trading below DMA 50 (3,940 ₹) signals short-term weakness.
Company Negative News
- Decline in DII holding (-0.35%) reflects reduced domestic institutional support.
- Weak technical indicators (RSI 40.4, MACD -52.8) show bearish momentum.
Company Positive News
- Quarterly PAT growth from 1,212 Cr. to 3,471 Cr. highlights strong performance.
- FII inflows (+0.58%) show foreign investor confidence.
Industry
- Industry P/E at 16.9 indicates moderate valuation levels.
- Infrastructure and engineering sector benefits from government spending and long-term demand.
- Companies with scale and diversified portfolios hold competitive advantage.
Conclusion
⚖️ Larsen & Toubro demonstrates strong fundamentals with robust earnings growth, diversified operations, and institutional support. Despite premium valuation and weak PEG ratio, the company remains a resilient large-cap player in infrastructure and engineering. Entry around 3,700–3,800 ₹ is recommended for long-term investors, with cautious monitoring of valuation and technical trends.