Larsen & Toubro (L&T) stock has not been re-rated to the same extent as peer stocks have been, Credit Suisse said on Thursday. This has prompted the foreign brokerage firm to hike its target price on the stock to Rs 2,250 from Rs 2,000 while maintaining its ‘outperform’ call.
Credit Suisse has raised L&T's target price partly due to revision in IT valuations and a higher valuation multiple of 20 times for the core business of engineering, procurement and construction.
Credit Suisse expects the company to benefit from the ongoing uptick over the next one to two years.
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It added that all parameters could be positively influenced once it starts leveraging cycle benefit.
L&T may have additional tailwinds from persistent strength in the overall orders in the Middle East (West Asia). The brokerage firm also said that lower commodity prices and asset sell down are also seen as supporting earnings.
Further, the lower interest cost on reduced debt and steps to leverage energy transition are additional catalysts for the Indian multinational conglomerate.
At 11:23 am, shares of the Mumbai-based company were flat at Rs 1,856 on the BSE.
