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Motilal Oswal
L&T (Buy)
CMP: ₹1,221.75
Target: ₹1,380
We hosted SN Subrahmanyan, MD and CEO of L&T part of CEO Track at our 13th Annual Global Investor Conference. Key takeaways from his presentation:
a) Strong momentum being witnessed across domestic infrastructure verticals — Rail/Metros, T&D, Water, Smart Cities, Airports, and Ports; Hydrocarbons and Defence also witnessing recovery.
b) Digitalisation and use of technology in construction a key focus area.
c) Expect a revival in manufacturing joint ventures/subsidiaries over the next few years — investment phase over; time to sweat the assets created.
d) L&T’s projects in the Middle East remain on track and are unaffected by the fall in oil prices over the past year. Its focus in the Middle East is on social infrastructure projects like Roads, Metro Rail, T&D and Stadiums.
e) We maintain our BUY rating with a SOTP based price target of ₹1,380.
Key risks: a) Sharp slowdown in government infrastructure capex; b) Sharp fall in oil prices impacting orders and execution in Middle East; c) Significant in increase in raw material prices, adversely affecting fixed price overseas contracts.
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