"As far as the EPS and price target is concerned, we haven't changed any of the numbers because our numbers are still quite conservative compared to what street has been putting up," Abhineet Anand, Capital Goods Analyst, Quant Capital said.
In an interview to CNBC-TV18, Abhineet Anand, Capital Goods Analyst, Quant Capital shared his reading and outlook on enginnering conglomorate L&T's Q1FY15 earnings. the broking firm has downgraded the stock from buy to accumulate and maintains a target price of Rs 1,686/share.
Below is the transcript of Abhineet Anand\\'s interview with Anuj Singhal and Ekta Batra on CNBC-TV18. For the complete interview watch the accompanying video
Anuj: What is your reaction to L&T's numbers and do you think this 6 percent fall is warranted?
A: We are expecting a 5-7 percent fall in the stock price today. So by that terms, I think it has already reacted to those numbers. Standalone numbers are largely in line with our estimates consolidated where people have been slightly disappointed based on how hydrocarbon and how other segments have performed.
Ekta: What is your call on the stock and what sort of EPS changes have you made post the numbers?
A: We have downgraded stock from buy to accumulate meaning there is limited upside on the stock. As far as the EPS and price target is concerned, we haven't changed any of the numbers because our numbers are still quite conservative compared to what street has been putting up. So by that our FY16 EPS is Rs 60, which is around 15-20 percent below what the street is expecting.
Anuj: What would be a good entry point for L&T? I know it is down 7 percent today but at what point would you say that it is a good buy?
A: I would say from Rs 1,450 levels from where our target price would have maybe 15 percent upside would be a fair price for L&T to enter.
Anuj: What is a single biggest concern that investor should have for L&T from hereon?
A: One is obviously on the hydrocarbon -- the loss is large and maybe in the coming quarters, we might not have a loss but even a breakeven type of thing brings down your overall earnings. Second also, if you try to look into the order inflow for the quarter, X of services order hasn't grown much, it has grown only 3-4 percent. Unless the order inflow comes up specifically in the infrastructure space and we cannot estimate higher revenues in FY16 and years to come by, so these are fewer things, which I perceive as a real threat.
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