Credit Suisse downgrades Larsen & Toubro to 'underperform' from 'neutral', on concerns about deteriorating order flow mix and rising working capital cycle, which could impact margins and cash generation.
Over 40% of L&T's orders are from the West Asia and real estate segments which are "prone to execution delays" and would earn lower margin.
It would be difficult for L&T to sustain this growth momentum on its historic high inflows, Credit Suisse said in a note.
Credit Suisse believes L&T is expensive at 17.5 times FY14 parent EPS for 10% EPS CAGR (FY12-14E) and also does not expect any material improvement in return on equity.
At 11:25 p.m., shares were up 0.81% at Rs 1,679.