LT - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Analysis: Larsen & Toubro Ltd (LT)

Investment Rating: 4.1

L&T is a blue-chip infrastructure and engineering conglomerate with strong fundamentals, consistent profitability, and a diversified business model. While valuation is slightly stretched, its long-term growth potential and execution strength make it a solid candidate for patient investors.

✅ Why It’s a Strong Long-Term Investment

Profitability & Efficiency

ROE (16.6%) and ROCE (14.5%) → solid returns on capital.

EPS (₹115) → strong earnings base.

Quarterly PAT Growth (29.8%) → robust momentum.

Valuation

P/E (30.9) > Industry P/E (23.8) → premium valuation, but justified by scale and execution.

PEG Ratio (1.35) → slightly elevated, but within acceptable range for quality compounders.

Price-to-Book (≈4.92) → reflects market confidence in future growth.

Financial Stability

Debt-to-Equity (1.36) → manageable for a capital-intensive business.

Dividend Yield (0.97%) → modest, but consistent.

Technical Signals

RSI (45.8) → neutral zone, not overbought.

MACD (-37.0) → bearish crossover, suggesting short-term caution.

Volume above average → strong investor interest.

🎯 Ideal Entry Price Zone

Based on DMA and support levels

Entry Zone: ₹3,350–₹3,450

₹3,495 is the 200 DMA, offering a technical support zone.

₹2,965 is the 52-week low, ideal for deep value accumulation.

Avoid entry near ₹3,964 (52-week high) unless breakout sustains.

🧭 Exit Strategy / Holding Period

If you already hold LT

Holding Period: Minimum 3–5 years to benefit from infra-led growth and ROE compounding.

Exit Strategy

Partial Exit near ₹3,950–₹4,100** if price approaches ATH and valuation stretches.

Full Exit if PEG rises above 1.7 or ROCE drops below 12%.

Trailing Stop Loss: Consider placing it around ₹3,300 to protect downside.

⚠️ Risks to Monitor

Valuation Premium → monitor PEG and P/E for signs of overheating.

FII Holding Decline (-0.47%) → slight institutional caution.

MACD Bearishness → short-term weakness possible.

Would you like a comparison with other infra-heavyweights or a projected earnings model for L&T?

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