ICICI Direct maintains buy on LT, sees 31% upside

ICICI Direct has maintained its buy recommendation on Larsen and Toubro (L&T) on the company bagging an Engineering, Procurement and Construction (EPC) order worth Rs 5689 crore from Rajasthan Rajya Vidyut Utpadan Nigam (Chhabra project). According to ICICI Direct, the stock is likely to touch Rs 1840 in 12-15 months.

The brokerage feels that post the Chabra project win, L&T is likely to meet its FY13 full year order guidance of Rs 80,000-84000 crore. With this win, the engineering and construction major has disclosed orders totaling Rs 10,674 crore in Q4FY13 so far and Rs 70674 on a FY13 basis.

ICICI Direct is expecting L&T to perform based on "adequate revenue visibility for more than 2.75 years (on a TTM basis), at a sound margin profile of  around 10.7/8 percent over FY13E-14E, coupled with a low leverage of 0.4 times and solid execution capabilities."

The management is also confident of not facing any financial hurdles in this particular project. Earlier in an interview to CNBC-TV18 , SN Roy, member of the Board at L&T said that the government has asked central as well as state utilities to tie up funds for projects well in advance.

Roy also added that L&T will complete the project in 42 months. The company has already deployed team for pre-commissioning activities for this project.

The stock is trading at Rs 1409 up around 1 percent on the BSE.

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