Larsen & Toubro Upgraded to 'Hold' Rating by MarketsMOJO, Attractive Valuation and Strong Institutional Holding.

Larsen & Toubro, a leading capital goods company, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This upgrade comes as the stock is currently in a Mildly Bullish range and the technical trend has improved from Sideways on 21-Oct-24. Additionally, the stock's Bollinger Band and DOW technical factors are also Mildly Bullish.
One of the reasons for this upgrade is the company's attractive valuation, with a ROCE of 16.8 and a 3.7 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 19.07%, while its profits have risen by 18.9%. The PEG ratio of the company is 1.7, indicating a healthy growth potential.

Moreover, Larsen & Toubro has a high institutional holding of 62.53%, which shows that these investors have better capability and resources to analyze the fundamentals of the company compared to retail investors. With a market cap of Rs 4,91,733 crore, it is the largest company in the capital goods sector, constituting 35.06% of the entire sector. Its annual sales of Rs 228,350.36 crore are 56.51% of the industry.

However, there are some concerns regarding the company's ability to service debt, as it has a high Debt to EBITDA ratio of 3.71 times. This could impact its long-term growth potential, as the operating profit has only grown by an annual rate of 3.54% over the last 5 years. In the latest quarter, the company's results were flat, with the lowest operating cash flow and cash and cash equivalents.

In the past year, Larsen & Toubro has underperformed the market, generating a return of 19.07% compared to the market (BSE 500) returns of 34.48%. While the stock may not have a strong growth potential in the near future, it is still a solid hold for investors looking for a stable and established company in the capital goods industry.