Stocks to watch out for in this bear market - 2

In recent times the company bagged few big orders. Larsen and Toubro is the emperor in Heavy Engineering and Construction business. Recently it got an order worth 10,470 million Rupees order from Indian Railways for setting up a Cast Steel Wheel Manufacturing plant in Saran (Chhapra) District of Bihar. The plant when commissioned will have the capacity to manufacture 100,000 Cast Steel Railroad Wheels per annum. It won the bid valued at Rs. 4,460 million (Rs. 446 crore) from M/s. JSW Power Transco Limited for evacuation of power from the 1,200 MW Power Project.

In the last month it received a Letter of Intent (LOI) for Rs. 15,570 million (Rs. 1,557 crore) for the Steam Turbine Generator package of 2 x 800 MW Sri Damodaram Sanjeevaiah Thermal Power Station at Krishnapatnam, Andhra Pradesh. It got an order worth Rs10,000 million for High-tech equipment & systems within 2 months of Q1 2008 - 09.

I know the P/E (multiple) of the share is around 30 and it is high compared to the market. But considering the future earnings potential of this company, this stands at ‘sure buy’ position if further correction happens in this scrip. Long term Investors with a horizon of 1-2 years can safely invest in this scrip for reaping benefits.

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July 11, 2008 | Filed Under Market Analysis 

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