LT - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.3
| Stock Code | LT | Market Cap | 5,41,116 Cr. | Current Price | 3,933 ₹ | High / Low | 4,440 ₹ |
| Stock P/E | 48.4 | Book Value | 542 ₹ | Dividend Yield | 0.97 % | ROCE | 19.8 % |
| ROE | 15.3 % | Face Value | 2.00 ₹ | DMA 50 | 3,935 ₹ | DMA 200 | 3,862 ₹ |
| Chg in FII Hold | -1.28 % | Chg in DII Hold | 0.33 % | PAT Qtr | 4,014 Cr. | PAT Prev Qtr | 3,756 Cr. |
| RSI | 48.5 | MACD | -4.91 | Volume | 14,29,410 | Avg Vol 1Wk | 19,44,230 |
| Low price | 3,288 ₹ | High price | 4,440 ₹ | PEG Ratio | 4.27 | Debt to equity | 0.17 |
| 52w Index | 56.0 % | Qtr Profit Var | 27.6 % | EPS | 45.7 ₹ | Industry PE | 17.5 |
📊 Financials: Larsen & Toubro (LT) demonstrates strong fundamentals with ROCE at 19.8% and ROE at 15.3%, reflecting efficient capital use. Debt-to-equity ratio of 0.17 indicates low leverage. EPS stands at ₹45.7, supported by PAT growth from ₹3,756 Cr. to ₹4,014 Cr. Quarterly profit variation (+27.6%) highlights robust earnings momentum. Dividend yield at 0.97% provides modest shareholder returns.
💹 Valuation: Current P/E of 48.4 is significantly higher than the industry average of 17.5, suggesting premium valuation. P/B ratio (~7.2, 3933/542) reflects heavy premium pricing relative to book value. PEG ratio of 4.27 indicates growth is overpriced. Intrinsic value analysis suggests the stock is richly valued, with limited margin of safety.
🏢 Business Model & Health: LT operates in engineering, construction, infrastructure, IT, and financial services, with strong competitive advantage in diversified operations and global presence. Low debt, consistent profitability, and strong ROCE support long-term sustainability. Institutional participation is mixed, with FII holdings declining (-1.28%) but DII holdings increasing (+0.33%).
📈 Entry Zone: Technical indicators (RSI 48.5, MACD -4.91, DMA 50 at ₹3,935, DMA 200 at ₹3,862) suggest consolidation. Accumulation near ₹3,800–₹3,950 could be favorable. Long-term investors may hold, given strong fundamentals and sectoral growth outlook.
Positive
- ✅ Strong ROCE (19.8%) and ROE (15.3%) highlight efficient capital use.
- ✅ Debt-to-equity ratio (0.17) ensures financial stability.
- ✅ PAT growth (+27.6%) indicates earnings resilience.
- ✅ Diversified business model across infrastructure, IT, and financial services.
- ✅ DII holdings increased (+0.33%), showing domestic institutional confidence.
Limitation
- ⚠️ High P/E (48.4) compared to industry average (17.5) suggests overvaluation.
- ⚠️ P/B ratio (~7.2) reflects significant premium pricing.
- ⚠️ PEG ratio (4.27) indicates growth is overpriced.
- ⚠️ Decline in FII holdings (-1.28%) reflects reduced foreign investor confidence.
Company Negative News
- 📉 Valuations remain stretched compared to intrinsic value.
- 📉 Decline in FII holdings (-1.28%) signals cautious foreign sentiment.
Company Positive News
- 📈 PAT growth from ₹3,756 Cr. to ₹4,014 Cr. shows strong operational performance.
- 📈 DII holding increased (+0.33%), reflecting domestic institutional support.
Industry
- 🌐 Industry P/E at 17.5 indicates moderate sector valuations.
- 🌐 Infrastructure and engineering sector benefits from government spending and global demand.
Conclusion
🔎 Larsen & Toubro is fundamentally strong with efficient capital returns, low debt, and diversified operations. However, valuations are stretched with high P/E and PEG ratios. Entry near ₹3,800–₹3,950 offers a balanced risk-reward opportunity. Long-term holding is justified, though investors should monitor valuation risks and institutional sentiment closely.