LT.NS · NSI · Industrials
Larsen & Toubro Limited
Also onConsensus Drift
Implied value per share
INR 2010.55
Market price
INR 3885.00
Implied upside
-48.2%
5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case
Value Per Share
Same forecast, different terminal treatment. Percentages vs price.
Forecast Cashflows
Reporting currency (INR). Outflows negative.
| Line | FY27 | FY28 | FY29 | FY30 | FY31 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | INR 3299.6bn | INR 3830.6bn | INR 4447.0bn | INR 5162.5bn | INR 5993.2bn | +16.1% |
| EBIT | INR 334.9bn | INR 388.7bn | INR 451.3bn | INR 523.9bn | INR 608.2bn | +16.1% |
| NOPAT | INR 250.5bn | INR 290.8bn | INR 337.6bn | INR 391.9bn | INR 454.9bn | +16.1% |
| Add depreciation & amortisation | INR 55.1bn | INR 64.0bn | INR 74.3bn | INR 86.2bn | INR 100.1bn | +16.1% |
| Less capital expenditure | INR -64.1bn | INR -74.4bn | INR -86.4bn | INR -100.3bn | INR -116.5bn | +16.1% |
| Less increase in working capital | INR -159.3bn | INR -185.0bn | INR -214.7bn | INR -249.3bn | INR -289.4bn | +16.1% |
| Free cashflow to firm | INR 82.1bn | INR 95.3bn | INR 110.7bn | INR 128.5bn | INR 149.2bn | +16.1% |
| Discount factor | 0.9500 | 0.8573 | 0.7736 | 0.6981 | 0.6300 | - |
| Present value | INR 78.0bn | INR 81.7bn | INR 85.6bn | INR 89.7bn | INR 94.0bn | +4.8% |
| Present Value Of The Forecast | INR 429.0bn | |||||
Discount Rate
Source shown per component. All overridable above.
| Risk-free rate | 6.80% | INR assumption - no free live source available for this market (assumption) |
| Equity risk premium | 8.00% | Market assumption |
| Beta | 0.670 | Reported 0.507, pulled toward 1.0 (Blume) |
| Cost of equity | 12.16% | Risk-free + beta x equity risk premium |
| Cost of debt | 6.80% | Floored at the risk-free rate (implied cost of debt was lower) |
| Market capitalisation | INR 5345.2bn | 81.0% of capital |
| Total debt | INR 1255.0bn | 19.0% of capital, book value as a proxy |
| Tax rate | 25.2% | Effective, capped at statutory |
| WACC | 10.81% | E/V x Re + D/V x Rd x (1 - t) |
Terminal Value
Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.
Perpetuity growth at 2.50%
87% of EV
- Forecast FCFF, final year
- INR 149.2bn
- Capex at depreciation, working capital in reinvestment
- INR 473.3bn
- Less reinvestment at g/ROIC (23.1% of NOPAT)
- INR -109.4bn
- Capitalised
- INR 363.9bn
- ROIC (WACC floor)
- 10.8%
- Terminal value, undiscounted
- INR 4486.5bn
- Terminal value, discounted
- INR 2826.5bn
- Enterprise value
- INR 3255.6bn
- Less net debt
- INR 488.7bn
- Equity value
- INR 2766.8bn
Exit at 18.6x EBITDA
95% of EV
- Terminal value, undiscounted
- INR 13153.6bn
- Terminal value, discounted
- INR 8286.8bn
- Enterprise value
- INR 8715.8bn
- Less net debt
- INR 488.7bn
- Equity value
- INR 8227.1bn
Spread between methods: 99%.
Sensitivity
Value per share (INR) by discount rate and long-run growth.
| Long-run growth | |||||
|---|---|---|---|---|---|
| Discount rate | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
| 8.81% | 2680.41 | 2693.75 | 2707.09 | 2720.43 | 2733.78 |
| 9.81% | 2298.53 | 2310.03 | 2321.53 | 2333.03 | 2344.53 |
| 10.81% | 1990.51 | 2000.53 | 2010.55 | 2020.57 | 2030.59 |
| 11.81% | 1737.42 | 1746.23 | 1755.04 | 1763.85 | 1772.65 |
| 12.81% | 1526.26 | 1534.06 | 1541.86 | 1549.66 | 1557.47 |
Outlined: this model. Green text: above today's price of 3885.00. Shading: distance from this model's own value.
Priced In
What each input would have to be to justify the current price, one at a time.
| Input | Model | Implied | Gap |
|---|---|---|---|
| Revenue growth, every year | 16.1% | 36.9% | +20.8pp |
| EBIT margin | 10.1% | 16.7% | +6.5pp |
| Discount rate | 10.8% | 7.2% | -3.7pp |
Live formulas, not pasted numbers - edit a driver and the workbook reprices.
Yahoo Finance and RBA data. General information, not advice. Methodology.