LT - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | LT | Market Cap | 5,52,179 Cr. | Current Price | 4,014 ₹ | High / Low | 4,440 ₹ |
| Stock P/E | 48.8 | Book Value | 494 ₹ | Dividend Yield | 0.85 % | ROCE | 18.5 % |
| ROE | 17.1 % | Face Value | 2.00 ₹ | DMA 50 | 3,924 ₹ | DMA 200 | 3,847 ₹ |
| Chg in FII Hold | -1.28 % | Chg in DII Hold | 0.33 % | PAT Qtr | 3,471 Cr. | PAT Prev Qtr | 1,212 Cr. |
| RSI | 54.2 | MACD | 69.3 | Volume | 28,18,876 | Avg Vol 1Wk | 22,71,640 |
| Low price | 3,284 ₹ | High price | 4,440 ₹ | PEG Ratio | 2.88 | Debt to equity | 0.27 |
| 52w Index | 63.2 % | Qtr Profit Var | 44.4 % | EPS | 45.3 ₹ | Industry PE | 18.5 |
Entry Zone: 3,950 ₹ – 4,000 ₹ (near 50 DMA support)
Exit Guidance: 4,350 ₹ – 4,400 ₹ (resistance zone)
Holding View: Strong candidate for long-term holding with valuation caution
Positive
- Strong ROCE (18.5%) and ROE (17.1%) highlight efficient capital utilization
- Low debt-to-equity ratio (0.27) ensures financial stability
- Quarterly PAT growth (1,212 Cr → 3,471 Cr) shows robust earnings momentum
- EPS of 45.3 ₹ provides a solid earnings base
- DII holdings increased (+0.33%), signaling domestic institutional support
- Stock trading above both 50 DMA (3,924 ₹) and 200 DMA (3,847 ₹) indicates bullish momentum
Limitation
- High P/E of 48.8 compared to industry PE of 18.5 — valuation stretched
- PEG ratio of 2.88 suggests growth is priced expensively
- FII holdings decreased (-1.28%), showing reduced foreign investor confidence
- Dividend yield of 0.85% offers limited income appeal
Company Negative News
- Valuation premium relative to peers may limit upside potential
- Reduced foreign institutional participation
Company Positive News
- Strong quarterly profit growth boosts investor sentiment
- Domestic institutional accumulation supports long-term confidence
- Technical indicators (RSI 54.2, MACD 69.3) show bullish momentum
Industry
- Industry PE at 18.5, much lower than LT’s 48.8 — sector valuations more moderate
- Sector momentum strong with 52-week index return of 63.2%
Conclusion
Larsen & Toubro demonstrates strong fundamentals with efficient capital returns, low leverage, and robust profit growth. However, stretched valuations and reduced foreign participation limit upside potential. Entry near 3,950–4,000 ₹ offers a favorable setup, with exits around 4,350–4,400 ₹ advisable. Long-term holding remains attractive if earnings growth sustains, though valuation monitoring and institutional flows should be tracked closely.
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