Hold Larsen and Toubro: Sharekhan

Sharekhan has recommended a hold rating on Larsen and Toubro (L&T) in its January 9, 2009 research report. "L&T Capital, a subsidiary of Larsen and Toubro (L&T), has raised its stake in Satyam Computer Services (Satyam) to about 3.95%. The shares were acquired in the last couple of weeks. We estimate the average acquisition price to be about R157, which takes the estimated buying value to about Rs418 crore. We view the event as a negative, as the transaction has already led to a portfolio loss of Rs 355 crore at the prevailing price of Satyam (Rs 6.1 per share for L&T Capital)."

"At the current market price, the L&T stock is trading at 10.1x its FY2010E consolidated earnings. The valuation is very attractive considering the company’s leadership position, strong order book and excellent execution skills. We recommend a Hold on the stock and are placing our price target under review," says Sharekhan's research report.
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