Pick of the Week-17 Feb-08

STOCK OF WEEK: L&T (BEST BUY IN PANIC)

BUY BUY BUY LASREN & TOUBRO

Equity: 58.43 Cr,(BSE: 500510 | NSE: LT | ISIN: INE018A01030)

BSE: 3,536.95 29.80 (0.85%)
NSE: 3,538.15 36.80 (1.05%)

L&T was hitting a high of 4600 before the sharp correction, and is now available at around 3300
3400 levels. That is around 30% from its highs. Recently there was a study done by BCG (Boston consulting). They studied more than 3,000 companies from 14 developing countries to pick the the top global contenders. They primarily focused on corporations with annual sales of at least $1 billion, with 10 percent of their revenue coming from outside their home countries.L&T was one topping their lists.

Larsen & Toubro strength is to build infrastructure which is in short supply in India relative to demand. It's a very good engineering company with low-cost production. It is expanding its construction business overseas, primarily in the Middle East. Its global operations currently account for 25 percent of sales. This will bring a good increase in its margins. Order book growth of 25% and 30% plus growth in towline over next few years is possible. Larsen & Toubro
(L&T) will set up a `mini L&T' in the Middle East, in a bid to enhance its operations in the region

The company plans to increase the overseas share to 25-30% in the coming years and expecting $2-billion revenues from the region by 2010.

It has many subsidaries.
1. L&T InfoTech IPO is likely in H2 2008.
2. L&T Infra Development will go for IPO by 2009-10

L&T should be giving you good upside over the next 12-24 months time. One can keep a price target of around 5000 to 5200 in 8 to 10 months time.