On Monday, JPMorgan initiated coverage on Larsen & Toubro Ltd. (LT:IN) (OTC: LTOUF) stock, a major technology, engineering, construction, manufacturing, and financial services conglomerate, with an Overweight rating. Alongside the positive rating, the firm also set a price target of INR 4,360.00.
Larsen & Toubro is currently trading at 25 times its forecasted core earnings per share (EPS) for the fiscal year 2026. The company is expected to see a compound annual growth rate (CAGR) of 23% in EPS from fiscal years 2024 to 2027.
Additionally, the firm is anticipated to have a return on core capital employed (RoCE) exceeding 20%. This combination of growth and valuation makes the stock an attractive investment opportunity, according to JPMorgan.
The expected fast growth in earnings per share is likely to be supported by a robust increase in core revenue, which is projected to grow by 16% from fiscal years 2024 to 2027. Furthermore, the company's core margins are estimated to expand by approximately 60 basis points during the same period.
Larsen & Toubro's broad range of capabilities, substantial order book, and strong financial position, including its balance sheet and cash flows, position it favorably to capitalize on capital expenditure trends in both India and the Middle East. The company's diverse operations and strategic positioning are key factors that underpin JPMorgan’s positive outlook on the stock.
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