Pick of the Week: Larsen and Toubro

FOR MEDIUM TERM BUY : BSE Code : 500510, CMP : 760.35

BUY LNT @ 760 Target: 820

Larsen & Turbo

L&T is the best stock in current panic scenario, and at dips, for good upside in medium to long term. Few months back a study was done by Boston Consulting - BCG. They studied more than 3,000 companies from 14 developing countries to pick the top global contenders. L&T topped their lists. They primarily focused on corporations with annual sales of at least $1 billion, and atleast 10 % of their revenues coming from outside their home countries. Larsen & Toubro strength is to build infrastructure which is in short supply in India relative to demand. It is expanding its construction business overseas, primarily in the Middle East. Its global operations currently account for 25 percent of sales. Order book growth of 25% and 30% plus growth in topline 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.L&T Infotech IPO is likely in H2 2008. L&T Infra Development will go for IPO by 2009-10. Apart from this there are several triggers for L&T.

L&T will invest close to Rs3,000 crore to build the shipyard-cum-port facility. When fully operational, the shipyard is likely to employ close to 10,000 people.L&T plans to begin construction of ships by end-2009, with plans to deliver the first ship by 2010-11. L&T is the only entity in the private sector that holds a license from the government to build warship Larsen & Toubro Ltd (L&T) is exploring the possibilities of making components of passenger aircraft at its factory at Coimbatore in Tamil Nadu.ndia's demand for airlines at 1,100 aircraft worth $105 billion (Rs4.15 trillion), over the next 20 years, according to the Associated Chambers of Commerce and Industry of India. L&T signs 'favoured partner' deal with Chinese oil giant Sinopec.

Larsen and Tourbo Limited has now become the first Indian company to enter with such a deal with the oil and refining giant, the Sinopec group that is regarded as the largest Chinese company in terms of total sales. L&T has already signed MoUs, with Raytheon Space and Airborne Systems, Boeing Company and EADS N.V., for joint exploration of business opportunities in India's defense sector. The company will be competing with the state-owned Hindustan Aeronautics Ltd. The defence sector placing orders worth $120 billion in the next 10 to 15 years. Larsen & Toubro Ltd., India's biggest engineering company, plans to spend $5 billion on starting a power generation business to tap electricity demand in the world's second-fastest growing major economy.

Latest Results: - Larsen & Toubro's Q2 net profit was up 32.47% at Rs 461 crore as against Rs 348 in same quarter of last year. Its net sales stood at Rs 7682.20 crore as compared to Rs 5499.94 crore. Margins stood at 8.8% versus 10.7% (YoY