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LT - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 3.9
📊 Financial Overview
- Profitability: PAT dropped from ₹3,485 Cr to ₹1,212 Cr QoQ, showing a sharp decline of 39.0%. EPS stands at ₹42.2.
- Return Metrics: ROE at 17.1% and ROCE at 18.5% reflect strong capital efficiency and operational performance.
- Valuation: P/E of 54.1 is significantly above the industry average (22.1), indicating premium valuation.
- P/B Ratio: With a book value of ₹494 and price of ₹4,031, P/B is ~8.2, suggesting a steep valuation multiple.
- PEG Ratio: 3.19 signals overvaluation relative to earnings growth.
- Debt Profile: Debt-to-equity ratio of 0.27 is healthy and manageable for a capital-intensive business.
- Momentum: RSI at 77.0 and MACD at 83.4 indicate strong bullish sentiment but nearing overbought territory.
🏢 Business Model & Competitive Edge
- Larsen & Toubro (LT) is a diversified engineering, construction, and technology conglomerate with operations across infrastructure, defense, IT, and financial services.
- Its strong execution capabilities, global footprint, and leadership in EPC projects provide long-term competitive advantage.
- Strategic investments in digital, green energy, and smart infrastructure enhance future growth visibility.
💡 Entry Zone Recommendation
- Current price is near its 52-week high and above both DMA 50 (₹3,755) and DMA 200 (₹3,598), indicating strong momentum.
- Suggested Entry Zone: ₹3,850–₹3,950 on dips for accumulation.
- Long-term holding is favorable given LT’s diversified business model and infrastructure tailwinds.
✅ Positive
- Strong ROE and ROCE reflect efficient capital deployment.
- Low debt-to-equity ratio supports financial stability.
- FII holdings increased by 0.15%, indicating foreign investor confidence.
⚠️ Limitation
- High P/E and PEG ratios suggest valuation concerns.
- Significant QoQ PAT decline may reflect project delays or one-time adjustments.
- RSI above 70 indicates overbought conditions and potential short-term correction.
📉 Company Negative News
- Stock has corrected slightly from its 52-week high of ₹4,063.
- DII holdings declined by 0.14%, suggesting cautious domestic sentiment.
📈 Company Positive News
- Strong order book and execution pipeline in infrastructure and defense sectors.
- Momentum indicators show continued investor interest and technical strength.
🏭 Industry
- Infrastructure and capital goods sectors benefit from government capex, urbanization, and industrial expansion.
- Industry P/E of 22.1 supports moderate valuation for quality players.
🧾 Conclusion
- Larsen & Toubro is a fundamentally strong conglomerate with diversified revenue streams and strategic growth initiatives.
- Entry near ₹3,850–₹3,950 offers a favorable long-term opportunity.
- Monitor earnings recovery and valuation metrics for sustained performance.
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