Fact based stock research
Larsen & Toubro (BSE:500510)

INE018A01030

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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.

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Larsen & Toubro stock research in summary

larsentoubro.com

ANALYSIS: With an Obermatt Combined Rank of 26 (worse than 74% compared with investment alternatives), Larsen & Toubro (Construction & Engineering, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Larsen & Toubro are low in value (priced high) with a consolidated Value Rank of 42 (worse than 58% of alternatives), and are riskily financed (Safety Rank of 16, which means above-average debt burdens) but show above-average growth (Growth Rank of 68). ...read more

RECOMMENDATION: A Combined Rank of 26, is a hold recommendation based on Larsen & Toubro's financial characteristics. As the company Larsen & Toubro shows low value with an Obermatt Value Rank of 42 (58% 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 68% of comparable companies (Obermatt Growth Rank is 68). 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 16 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. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	n/a
Growth Rank	n/a
Safety Rank	n/a
Combined Rank	n/a

Country	India
Industry	Construction & Engineering
Index	Independent Boards Growth Markets, Water Tech, CNX Nifty 50
Size class	XX-Large

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Larsen & Toubro

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	33	35	35	n/a
GROWTH
GROWTH	35	63	81	n/a
SAFETY
SAFETY	26	30	18	n/a
SENTIMENT
SENTIMENT	n/a	53	78	^new
360° VIEW
360° VIEW	n/a	25	61	^new

Most recent update of the stock research: . Financial reporting date used for calculating ranks: . Stock research history is based on the Obermatt Method. The higher the rank, the better Larsen & Toubro is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	33	35	35	n/a
GROWTH
GROWTH	35	63	81	n/a
SAFETY
SAFETY	26	30	18	n/a
COMBINED
COMBINED	30	30	36	n/a

Last update of combined financial performance: . Stock analysis on combined financial performance: The higher the rank of Larsen & Toubro the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 42 (worse than 58% 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 three out of four indicators below average for Larsen & Toubro. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 56% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: 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. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 39 which means that the stock price compared with what market professionals expect for future profit levels is higher than 61% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 37 is also low. Compared with invested capital, the stock price is higher than for 63% of comparable investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 42, is a hold recommendation based on Larsen & Toubro's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Larsen & Toubro? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Larsen & Toubro only if they reasonably expect the low current profit levels to be transitory. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	28	47	41	n/a
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	43	38	36	n/a
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	20	34	34	n/a
DIVIDEND YIELD
DIVIDEND YIELD	48	56	46	n/a
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	33	35	35	n/a

Last update of Value Rank: . Stock analysis on value ratios: The higher the rank, the lower the value ratio of Larsen & Toubro; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 68 (better than 68% compared with alternatives), Larsen & Toubro shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Larsen & Toubro. Profit Growth has a rank of 60 which means that currently professionals expect the company to grow its profits more than 60% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 59, and Stock Returns has a rank of 90 which means that the stock returns have recently been above 90% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 42 (58% of its competitors are better). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 68, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	11	62	46	n/a
PROFIT GROWTH
PROFIT GROWTH	70	60	61	n/a
CAPITAL GROWTH
CAPITAL GROWTH	n/a	27	64	n/a
STOCK RETURNS
STOCK RETURNS	92	71	91	n/a
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	35	63	81	n/a

Last update of Growth Rank: . Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Larsen & Toubro.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 16 (better than 16% 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 all three metrics below average for Larsen & Toubro. Liquidity is at 43, meaning that the company generates less profit to service its debt than 57% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 15, meaning the company has an above-average debt-to-equity ratio. It has more debt than 85% of its competitors. Finally, Refinancing is at a rank of 48 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 52% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 16 (worse than 84% compared with alternatives), Larsen & Toubro has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. Investors should look at Obermatt’s Value, Growth, and Sentiment Ranks to confirm a very positive outlook or be careful with investing in stocks of Larsen & Toubro because it may suffer significantly in case of future difficulties. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	30	18	18	n/a
REFINANCING
REFINANCING	60	62	46	n/a
LIQUIDITY
LIQUIDITY	30	39	46	n/a
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	26	30	18	n/a

Last update of Safety Rank: . Stock analysis on safety metrics: The higher the rank, the lower the leverage of Larsen & Toubro and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	90	93	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	40	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	5	56	^new
MARKET PULSE
MARKET PULSE	n/a	71	67	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	53	78	^new

Last update of Sentiment Rank: . Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Larsen & Toubro.
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