Larsen & Toubro expecting strong growth by earnings and orderbook

I put overweight rating and a 12-month price target of Rs 5,010 citing expectation of strong earnings and order book growth. “Expecting an earnings CAGR (compounded annual growth rate) of 45% over FY07-10 and ROE (return on equity) of 31% in FY08E (adjusted for investments in subsidiaries),” the investment bank said. Expects the company’s order book to grow 40%, on a compounded basis, toll 2009-10. “Expect L&T Infotech, L&T Finance and certain manufacturing subsidiaries to record growth in excess of 30% over the next three years. Value discovery in some of the subsidiaries is a strong possibility over the next three years, in a view.”