April 11, 2024
Top 10 Stock Larsen & Toubro Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Larsen & Toubro – Top 10 Stock in Water Technology
Larsen & Toubro is listed as a top 10 stock on April 11, 2024 in the market index Water Tech because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 77 (top 77% performer), Obermatt assesses an overall strong buy recommendation for Larsen & Toubro on April 11, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Construction & Engineering |
| Index | Independent Boards Growth Markets, Water Tech, CNX Nifty 50 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Larsen & Toubro Strong Buy
| 360 METRICS | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 37 |
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| GROWTH | ||||||||
| GROWTH | 98 |
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| SAFETY | ||||||||
| SAFETY | 24 |
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| SENTIMENT | ||||||||
| SENTIMENT | 84 |
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| 360° VIEW | ||||||||
| 360° VIEW | 77 |
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ANALYSIS: With an Obermatt 360° View of 77 (better than 77% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Larsen & Toubro are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Larsen & Toubro. The consolidated Growth Rank has a good rank of 98, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 98% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 84, which means that professional investors are more optimistic about the stock than for 84% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 37, which means that the share price of Larsen & Toubro is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 63% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 24, which means that the company has a financing structure that is riskier than those of 76% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 77, Larsen & Toubro is better positioned than 77% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 98), and professional market sentiment is positive (Sentiment Rank of 84), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Larsen & Toubro very positive
ANALYSIS: With an Obermatt Sentiment Rank of 84 (better than 84% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Larsen & Toubro is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Larsen & Toubro. Analyst Opinions are at a rank of 86 (better than 86% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 58, which means that currently, professional investors hold more stock in this company than in 58% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 73 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 73% of competitors). But Analyst Opinions Change has a below-average rank of 45, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Larsen & Toubro. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 84 (more positive than 84% compared with investment alternatives), Larsen & Toubro has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Larsen & Toubro Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 37 (worse than 63% compared with alternatives), Larsen & Toubro shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Larsen & Toubro. Price-to-Sales is 44 which means that the stock price compared with what market professionals expect for future profits is higher than 56% of comparable companies, indicating a low value concerning Larsen & Toubro's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 37, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Larsen & Toubro. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 40 and Dividend Yield, which is lower than 57% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 37, is a hold recommendation based on Larsen & Toubro's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Larsen & Toubro? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Larsen & Toubro? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Larsen & Toubro may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Larsen & Toubro Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 98 (better than 98% compared with alternatives) for 2024, Larsen & Toubro shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Larsen & Toubro. Sales Growth has a value of 85, which means that, currently, professionals expect the company to grow more than 85% of its competitors. The same is valid for Profit Growth with a value of 57 and for Capital Growth with 85. In addition, Stock Returns had an above-average rank value of 87, which means they have been higher than 87% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 98, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Larsen & Toubro exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Larsen & Toubro Debt Financing Safety risky
| SAFETY METRICS | April 11, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 17 |
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| REFINANCING | ||||||||
| REFINANCING | 60 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 47 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 24 |
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ANALYSIS: With an Obermatt Safety Rank of 24 (better than 24% compared with alternatives), the company Larsen & Toubro has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Larsen & Toubro is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Larsen & Toubro and the other two below average. Refinancing is at 60, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 60% of its competitors. But Leverage is high with a rank of 17, meaning the company has an above-average debt-to-equity ratio. It has more debt than 83% of its competitors. Liquidity is also on the riskier side with a rank of 47, meaning the company generates less profit to service its debt than 53% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 24 (worse than 76% compared with alternatives), Larsen & Toubro has a financing structure that is significantly riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Larsen & Toubro are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: Larsen & Toubro Above-Average Financial Performance
| COMBINED PERFORMANCE | April 11, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 37 |
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| GROWTH | ||||||||
| GROWTH | 98 |
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| SAFETY | ||||||||
| SAFETY | 47 |
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| COMBINED | ||||||||
| COMBINED | 58 |
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ANALYSIS: With an Obermatt Combined Rank of 58 (better than 58% compared with investment alternatives), Larsen & Toubro (Construction & Engineering, India) shares have above-average financial characteristics compared with similar stocks. Shares of Larsen & Toubro are low in value (priced high) with a consolidated Value Rank of 37 (worse than 63% of alternatives), and are riskily financed (Safety Rank of 24, which means above-average debt burdens) but show above-average growth (Growth Rank of 98). ...read more
RECOMMENDATION: A Combined Rank of 58, is a buy recommendation based on Larsen & Toubro's financial characteristics. As the company Larsen & Toubro shows low value with an Obermatt Value Rank of 37 (63% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 98% of comparable companies (Obermatt Growth Rank is 98). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 24 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Larsen & Toubro, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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