L&T has bagged six small value orders in the domestic market totaling Rs12.3 bn from government and quasi-government bodies in the Power and Railways sector. Rs5.0 bn turnkey order from Mahatransco – entailing construction of 220kV multi-circuit transmission system over 130 kms in Mumbai. Tenure of the project is 24 months. Rs2.5 bn order from Chattisgarh SEB – construction of 400kV double circuit transmission line across 224 kms from Korba West to Khedamara (Bhilai). Tenure of the project is 24 months. Rs1.0 bnorder from Power Grid Corporation – construction of 400kV transmission lines across 126 km under Northern Region System Strengthening Scheme (XIV) and Rampur Hydroelectric project. Tenure of the project is 25 months. Rs1.9 bn order from Rail Vikas Nigam – construction of 45 kms of railway line in West Bengal. Tenure of the project is 24 months. Another Rs0.7 bn EPC contract from Mahatransco – construction of 220/132/33kV sub-station at Tuljapur & Paranda in Maharashtra. Tenure of the project is 12 months. Rs1.3 bn order from Maharashtra State Electricity Distribution Co. – construction of 33kV sub-station in Akola & Washim, Maharashtra. Tenure of the project is 24 months.
With the above orders L&T has secured a total of Rs17.5 bn orders in Q1FY10 YTD (L&T had bagged orders worth Rs122 bn in Q1FY09 in comparison). The management in its earlier communication had guided for 25-35% growth in order inflows. We believe that revival in order inflows will be witnessed only from H2FY10E. At CMP the stock is trading at 27.5X FY10E and 23.2X FY11E consolidated earnings of Rs58.9 and Rs69.9 per share respectively. In view of current expensive valuations, we maintain our 'Reduce' rating on the stock with a target price of Rs1095.
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