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.

(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.

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 44 (worse than 56% of alternatives), and are riskily financed (Safety Rank of 18, which means above-average debt burdens) but show above-average growth (Growth Rank of 66). ...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 44 (56% 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 66% of comparable companies (Obermatt Growth Rank is 66). 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 18 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	44
Growth Rank	66
Safety Rank	18
Combined Rank	26

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

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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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	44
GROWTH
GROWTH	35	63	81	66
SAFETY
SAFETY	26	30	18	18
SENTIMENT
SENTIMENT	n/a	53	78	^new
360° VIEW
360° VIEW	n/a	25	61	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. 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	44
GROWTH
GROWTH	35	63	81	66
SAFETY
SAFETY	26	30	18	18
COMBINED
COMBINED	30	30	36	26

Last update of combined financial performance: 19-Dec-2024. 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 44 (worse than 56% 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 half of the indicators below and half above average for Larsen & Toubro. Price-to-Profit (also referred to as price-earnings, P/E) is 50 which means that the stock price compared with what market professionals expect for future profits is lower than for 50% of comparable companies, indicating a good value concerning Larsen & Toubro's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 43, which means that the stock price is lower as regards to invested capital than for 43% of comparable investments. On the other hand, Price-to-Sales is less favorable than 53% of alternatives (only 47% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 47% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 44, is a hold recommendation based on Larsen & Toubro's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. 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 especially important 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	47
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	43	38	36	50
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	20	34	34	43
DIVIDEND YIELD
DIVIDEND YIELD	48	56	46	53
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	33	35	35	44

Last update of Value Rank: 19-Dec-2024. 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 66 (better than 66% 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. Sales Growth has a value of 55 which means that currently professionals expect the company to grow more than 55% of its competitors. Profit Growth with a value of 74 and Capital Growth with a rank of 63 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 42, which means that stock returns have recently been below 58% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 66, is a buy recommendation for growth and momentum investors. Larsen & Toubro has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Larsen & Toubro, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. 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	55
PROFIT GROWTH
PROFIT GROWTH	70	60	61	74
CAPITAL GROWTH
CAPITAL GROWTH	n/a	27	64	63
STOCK RETURNS
STOCK RETURNS	92	71	91	42
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	35	63	81	66

Last update of Growth Rank: 19-Dec-2024. 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 18 (better than 18% 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. Liquidity is at 50, meaning the company generates more profit to service its debt than 50% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 44, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 56% of its competitors. Leverage is also high at a rank of 17, which means that the company has an above-average debt-to-equity ratio. It has more debt than 83% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 18 (worse than 82% compared with alternatives), Larsen & Toubro has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	30	18	18	17
REFINANCING
REFINANCING	60	62	46	44
LIQUIDITY
LIQUIDITY	30	39	46	50
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	26	30	18	18

Last update of Safety Rank: 19-Dec-2024. 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: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Larsen & Toubro.
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