L&T dips 7% after poor Q1 show

Citi, Deutsche downgrade the stock

Engineering major Larsen & Toubro’s (L&T’s) share price fell the most in a year on brokerage downgrades after the company’s dismal first quarter numbers. Shares of the company fell 7.32 per cent to Rs 1,542, a two-month low.

Citigroup downgraded L&T from ‘buy’ to ‘neutral’ and said that investors “need to curb their enthusiasm”. Despite today’s fall, shares of L&T are up 42% so far in 2014 compared to a 24% increase in the benchmark Sensex.

Deutsche Bank also downgraded L&T from ‘buy’ to ‘hold’ and cut its price target on the stock by 18 per cent to Rs 1,560.  L&T had posted a twofold jump in consolidated net profit during the June quarter.

However, it was largely on the back of one-time gains from stake sales in its L&T Finance Holdings and Dhamra Port. Citi, in a note, said that the company’s stand-alone sales and margin numbers ‘raise multiple red flags’.