LT - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.5

📊 Core Financials & Profitability

Earnings Growth: PAT rose from ₹3,145 Cr to ₹3,485 Cr QoQ — a solid 17.4% increase. EPS of ₹82.8 is strong for a ₹3,686 stock.

Return Metrics

ROE: 17.1% and ROCE: 18.5% — excellent, reflecting efficient capital deployment.

Debt Profile: Debt-to-equity at 0.31 — moderate and well-managed for a capital-intensive conglomerate.

Dividend Yield: 0.92% — modest, with consistent payouts.

💸 Valuation Indicators

Metric Value Insight

P/E Ratio 46.0 Richly valued vs. industry PE of 20.6.

P/B Ratio ~7.05 Elevated relative to book value ₹523.

PEG Ratio 2.71 Indicates growth is priced at a premium.

🔍 Conclusion: L&T is trading at a premium, but justified by strong earnings, diversified business segments, and robust order inflow.

🏗️ Business Model & Competitive Edge

Core Operations: Larsen & Toubro is India’s largest engineering and infrastructure conglomerate, with operations spanning EPC, IT services, defence, energy, and manufacturing.

Strategic Strengths

Recent wins include a ₹2,500–₹5,000 Cr order for the Mumbai–Ahmedabad bullet train project

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Expanding into green hydrogen, data centers, and defence manufacturing

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Strong institutional interest: DII holdings up 0.77%.

Growth Outlook

CLSA maintains an “Outperform” rating with a target of ₹4,320 — ~17% upside

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EPS revised to ₹115.38 with a lower P/E of 31.08 based on recent market data

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Six-month beta of 1.298 suggests higher volatility

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, but also potential for alpha generation.

📉 Technicals & Entry Zone

RSI: 63.1 — slightly bullish, nearing overbought.

MACD: 13.9 — positive momentum.

DMA Levels: Price above both 50-DMA and 200-DMA — trend strength confirmed.

📌 Suggested Entry Zone: ₹3,550–₹3,600 — near 50-DMA, offering a better margin of safety.

🕰️ Long-Term Holding Guidance

Hold if Invested: Strong fundamentals, diversified growth drivers, and infra tailwinds support long-term compounding.

Buy on Dips: Prefer entry below ₹3,600, especially if RSI cools below 60.

Monitor: Order book strength, execution timelines, and capex cycles.

You can explore Upstox’s coverage of L&T’s recent project wins and strategic expansion, or follow Economic Times’ liveblog for real-time updates and valuation metrics. Let me know if you'd like a peer comparison with BHEL or Siemens India next.

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upstox.com

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stockanalysis.com

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economictimes.indiatimes.com

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