1. CMP 1648.00 Target Price 1812.00 ISIN: INE018A01030 JUNE 2nd 2014 LARSEN & TOUBRO LIMITED Result Update (PARENT BASIS): Q4 FY14 BUYBUYBUYBUY Index Details Stock Data Sector Const & Engg BSE Code 500510 Face Value 2.00 52wk. High / Low (Rs.) 1650.00/678.10 Volume (2wk. Avg.) 283000 Market Cap (Rs. in mn.) 1527531.20 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales 565989.20 639567.80 709920.25 EBITDA 85479.10 96685.57 104505.52 Net Profit 54931.30 56531.30 61739.60 EPS 59.26 60.99 66.61 P/E 27.81 27.02 24.74 Shareholding Pattern (%) 1 Year Comparative Graph LARSEN & TOUBRO LTD S&P BSE SENSEX SYNOPSIS Larsen & Toubro is a USD 14 billion technology, engineering & construction group with global operations. During the quarter, net profit jumps to Rs. 27234.80 mn against Rs. 17879.40 mn in Q4 FY13, an increase of 52.33%. Revenue for the quarter rose by 11.08% to Rs. 200791.00 mn from Rs. 180756.00 mn, when compared with the prior year period. The International revenue during the quarter was at Rs. 29660 mn constituted 15% of the total revenue and registered a growth of 25% on a y-o-y basis. The order intake during the quarter was steady at Rs. 267370 mn. International order inflow during the quarter at Rs. 113890 mn constituted 43% of the total order inflow for the quarter. Order Book at Rs. 1629520 mn as at March 31, 2014, grew 13% on a y-o-y basis. International Order Book constituted 21% of the total Order Book. L&T has recommended a Dividend of Rs. 14.25/- per share of Rs. 2/- each for the year ended March 31, 2014. L&T Speical Steels and Heavy Forgings have entered into a Technology Collaboration Agreement with Japan Steel Works. The Company secured fresh orders worth Rs. 941080 mn during the year ended March 31, 2014, registering a significant y-o-y growth of 15%. L&T recorded Gross Revenue of Rs. 571638.5 mn for the year ended March 31, 2014, registering a growth of 10% over the previous year. L&T Construction has won new orders worth Rs.24580 mn across various business segments in May 2014. Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 13% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Larsen & Toubro Ltd 1648.00 1527531.20 59.26 27.81 4.54 712.50 Jaiprakash Associates Ltd 77.30 171535.20 1.87 41.34 1.29 0.00 Voltas Ltd 193.35 63976.60 5.48 35.28 4.31 185.00 GMR Infrastructure Ltd. 34.20 133121.30 0.43 79.53 1.85 10.00

2. Recommendation & Analysis - BUY For the quarter ended March 31, 2014, gross revenue at Rs. 202293.8 mn, registered a y-o-y growth of 11% with progress on various jobs under execution. The International revenue during the quarter ended March 31, 2014 at Rs. 29660 mn constituted 15% of the total revenue and registered a growth of 25% on a y-o-y basis. The PAT for the quarter January-March 2014 at Rs. 27234.8 mn recorded an impressive increase of 52%. L&T recorded Gross Revenue of Rs. 571638.5 mn for the year ended March 31, 2014, registering a growth of 10% over the previous year. The International revenue during the year at Rs. 91290 mn constituted 16% of the total revenue and registered a y-o-y growth of 22%.The Profit after Tax (PAT) for the year stood at Rs. 54931.3 mn vis--vis Rs. 43844.9 mn in the previous year registering a growth of 25% on a like-to-like basis. The recurring PAT for the year at Rs. 49050 mn also grew 18% on a y-o-y basis. The Company successfully secured fresh orders worth Rs. 941080 mn during the year ended March 31, 2014, registering a significant y-o-y growth of 15%, on a large base despite a sluggish economic environment during 2013-14. The International order inflow during the year at Rs. 307520 mn grew more than 3 times on a y-o-y basis, constituting 33% of the total order inflow. Major orders during year were procured by the Infrastructure segment. The Company has successfully weathered the challenging times of the past few years due to its inherent capabilities and strong balance sheet. Being well positioned to tap the emerging opportunities in its core businesses, the Company looks forward to a period of renewed investment momentum and sustainable growth. Given its large order book, the Company is optimistic to maintain its growth momentum in the medium term, as domestic and global economic environment improves. Hence, we recommend BUY for Larsen & Toubro Ltd with a target price of Rs. 1812.00 for medium to long term investment.

3. QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q4 FY14, Larsen & Toubro is a USD 14 billion technology, engineering, construction, manufacturing and financial services conglomerate, with global operations, reported its financial results for the quarter ended 31st March, 2014. Months Mar-14 Mar-13 (Restated) % Change Net Sales 200791.00 180756.00 11.08 Net Profit 27234.80 17879.40 52.33 EPS 29.38 29.18 0.71 EBITDA 33962.30 25187.10 34.84 The companys net profit jumps to Rs. 27234.80 million against Rs. 17879.40 million in the corresponding quarter ending of previous year, an increase of 52.33%. Revenue for the quarter rose by 11.08% to Rs. 200791.00 million from Rs. 180756.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 29.38 a share during the quarter, registering 0.71% increase over previous year period. Profit before interest, depreciation and tax is Rs. 33962.30 million as against Rs. 25187.10 million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Rs. In Millions Q4 FY14 Q4 FY13 Consumption of Raw Materials, Components & stores 22659.50 26434.20 Sub contracting changes 43494.00 41135.90 Construction of material consumed 56925.60 50022.40 Purchase of Stock in Trade 5115.50 6078.70 Other Manufacturing Expenses 10947.10 10645.20 Employee benefit Cost 12295.50 9791.60 Sales & Administrative expenses 2390.10 7038.40 Depreciation, Amortization & Obsolescence 2138.30 1968.50

4. Segment Revenue Segment wise performance Infrastructure Segment Infrastructure Segment achieved Customer Revenue of Rs. 345160 mn for the year ended March 31, 2014 registering a healthy y-o-y growth of 23%, driven by Buildings and Factories, Power Transmission & Distribution, Transportation Infrastructure and Water & Renewable Energy businesses. International sales constituted 15% of the total customer revenue of the segment during the year. During the quarter, revenue of Rs. 1353.94.7 mn for the quarter, registered a healthy y-o-y growth of 18%, Infrastructure segment recorded consistently upward trend in the order intake throughout the year. The order inflow for the year ended March 31, 2014 stood at Rs. 763960 mn registering 37% growth over the previous year. International orders constituted around 33% of the total order inflow of the segment for the year. During the quarter January-March 2014, the Segment recorded order inflow of Rs. 212900 mn registering a robust increase of 64% over the corresponding quarter of the previous year. The Order Book of the Infrastructure Segment grew 29% on a y-o-y basis and stood healthy at Rs. 1270680 mn as at March 31, 2014. The segment recorded improved EBIDTA margin at 12.3% during the year ended March 31, 2014 vis--vis 11.3% recorded in the previous year aided by execution efficiencies and better contract management.

5. Power Segment Power Segment recorded customer revenue of Rs. 51320 mn during the year ended March 31, 2014, registering a reduction of 36% over the previous year due to declining order book and delays in realizing targeted order inflow. For the quarter January-March 2014, the Customer Revenue was at Rs. 14723.2 mn, recording y-o-y decline of 29%. Power Segment secured fresh orders of Rs. 32770 mn for the year ended March 31, 2014, registering a decline of 59% over the previous year due to continued slow-down in the domestic power sector. Order inflow of the Segment during the quarter ended March 31, 2014 stood at Rs. 21200 mn, consequent to bagging of a large international order. The Order Book of the Segment declined 11% on a y-o-y basis and stood at Rs. 156010 mn as at March 31, 2014. The segment EBIDTA margin stood at 11.0% for the year ended March 31, 2014 vis--vis 7.9% recorded in the previous year reflecting stage of completion of projects under execution. Metallurgical & Material Handling (MMH) Segment The Customer Revenue of MMH Segment during the year ended March 31, 2014 at Rs. 53570 mn registering a y- o-y decrease of 9%, on account of reduced opening order book and slower progress on some of the existing jobs due to pending clearances. The Customer Revenue for the quarter January-March 2014 stood at Rs. 17880.3 mn, registering y-o-y decline of 6 %. MMH Segment secured fresh orders of Rs. 25740 mn during the year ended March 31, 2014, registering a decline of 50% over the previous year. The order inflow for the quarter January to March 2014 stood at Rs. 5620 mn. The order inflow of the Segment was lower during 2013-14 on account of several unresolved sectoral issues, adversely impacting expansion plans and new investments in the sector. The Order Book of the Segment declined by 38% on a y-o-y basis and stood at Rs. 97280 mn as at March 31, 2014. The EBIDTA margin of the segment stood at 17.0% for the year ended March 31, 2014 vis--vis 17.9% recorded in the previous year.

6. Heavy Engineering Segment Heavy Engineering Segment achieved Customer Revenue of Rs. 42910 mn registering an impressive growth of 50% over the previous year with good progress on jobs under execution. International sales constituted 31% of the total customer revenue of the segment for the year ended March 31, 2014. The Customer Revenue during the quarter January-March 2014 stood at Rs.13573 mn, registering a healthy growth of 47% over the corresponding quarter of the previous year. Heavy Engineering Segment secured fresh orders valued Rs. 33230 mn, during the year ended March 31, 2014, lower by 17% as compared to the previous year on account of deferral of anticipated orders. International orders constituted 32% of the total order inflow of the segment. During the quarter January-March 2014, the Segment recorded order inflow of Rs. 4960 mn, lower by 22% over the corresponding quarter of the previous year. The Order Book of the Segment declined 14% on a y-o-y basis and stood at Rs. 65880 mn as at March 31, 2014. The EBIDTA margin of the segment stood at 18.2% for the year ended March 31, 2014 vis--vis 21.3% recorded in the previous year due to escalation in execution costs Electrical & Automation (E&A) Segment During Q4 FY14, E&A Segment registered a growth of 4% to Rs. 11601.6 mn. International sales contributed to 13% of the total segment revenue for the year ended March 31, 2014. The EBIDTA Margin of the E&A Segment at 14.2% for the year ended March 31, 2014. Machinery & Industrial Products (MIP) Segment MIP Segment recorded Customer Revenue of Rs. 4563.1 mn for the quarter ended March 31, 2014 registered a decline of 39% over the corresponding quarter of the previous year. Others Segment Others segment comprises Integrated Engineering Services (IES), Shipbuilding and Property Development business. Customer Revenue of Others Segment at Rs. 9258.3 mn in Q4 FY14, registered a growth of 142%.

7. Latets Updates Larsen & Toubro Ltd have recommended a Dividend of Rs. 14.25/- per share of Rs. 2/- each for the year ended March 31, 2014. As on March 31, 2014, Order Book at Rs. 1629520 mn grew by 13% on a y-o-y basis. International Order Book constituted 21% of the total Order Book. During the quarter ended March 31, 2014, The Company has allotted equity shares equivalent to 8,43,664 equity shares of Rs. 2/- each post-bonus fully paid-up, on exercise of stock options by employees, in accordance with the Company's stock option schemes. L&T Speical Steels and Heavy Forgings have entered into a Technology Collaboration Agreement with Japan Steel Works. L&T IDPL a subsidiary of Larsen & Toubro Ltd and Tata Steel have executed a definitive agreement with Adani Ports and SEZ (Adani Ports) to sell 100% stake in the Dharma Port Company Ltd for an eEnterprice value of Rs. 55000 mn. Orders from segments (Q4 FY14) L&T Construction has won new orders worth Rs. 24580 mn across various business segments in May 2014. Larsen & Toubro has received two EPC (engineering, procurement and construction) orders valued at around US$ 480 million for setting up dual fuel-fired gas based combined cycle power plants in Bangladesh. The Heavy Civil Infrastructure Business of L&T Construction has made a major breakthrough in the State of Qatar by winning a prestigious US $740 million (approx. Rs. 45100 mn) order from Qatar Railways Company for the design and construction of the Gold Line of the Doha Metro project in Qatar. L&T Construction has won new orders worth Rs. 10090 mn across various business segments in March 2014. The Buildings & Factories Business of L&T Construction has won new housing orders worth Rs. 19810 mn in March 2014. A major residential order has been bagged in Bangalore from one of south Indias leading property developers which is also the companys biggest residential order in this financial year. The Transportation Infrastructure Business of L&T Construction has secured a major prestigious international order worth Rs. 36550 mn (2.187 billion Qatari riyal) from ASHGHAL (Public Works Authority), State of Qatar for design and construction of Al Wakrah Bypass Road (P015).

8. L&T Construction has won new orders worth Rs. 29350 mn across various business segments in February and March 2014. The Transportation Infrastructure Business of L&T has bagged a prestigious international order worth Rs. 15500 mn from the Ministry of Transport and Communications, Sultanate of Oman, for the construction of a road between Bidbid-Sur Section (Second Phase, First Part). L&T Construction has won new orders worth Rs. 52200 mn across various business segments in January & February 2014. COMPANY PROFILE Larsen & Toubro Ltd (L&T) is a technology, engineering, construction & manufacturing company. L&T is a technology-driven USD 14 billion company that infuses engineering with imagination. It is considered as one of the largest and most respected companies in India's private sector. Larsen & Toubro Limited is the biggest legacy of two Danish Engineers, Henning Holck-Larsen & S.K. Toubro who built a world-class organization that is professionally managed and a leader in India's engineering and construction industry. Holck-Larsen and Toubro founded the partnership firm of L&T in 1938, which was converted into a limited company on February 7, 1946. Today, the company has grown to a large conglomerate spanning engineering and construction. ECC was conceived as Engineering Construction Corporation Limited in April 1944 and was incorporated as wholly owned subsidiary of Larsen & Toubro Limited. L&T has an international presence, with a global spread of offices. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. Business Areas Turnkey Projects Construction IT & Engineering Services Financial Services Shipbuilding Power projects Engineered Products & Systems Electrical & Electronic Products & Systems Machinery Valves & Industrial Consumables Divisions Engineering & Construction Projects (E&C) Heavy Engineering (HED) Engineering Construction & Contracts (ECC) Electrical & Electronics (EBG) Machinery & Industrial Products (MIPD) Information Technology & Engineering Services

9. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March31, 2013 -2016E LARSEN & TOUBRO LTD. FY13A FY14A FY15E FY16E SOURCES OF FUNDS Shareholder's Funds Share Capital 1230.80 1853.80 1853.80 1853.80 Reserves and Surplus 290196.40 334764.50 391103.30 452842.90 1. Sub Total - Net worth 291427.20 336618.30 392957.10 454696.70 Non Current Liabilities Long Term Borrowing 72710.30 54781.40 46016.38 41874.90 Deferred Tax Liabilities 2422.20 4099.20 4960.03 5704.04 Other Long term Liabilities 5020.30 935.70 785.99 691.67 Long Term Provisions 2859.20 2996.10 3115.94 3209.42 2. Sub Total - Non Current Liabilities 83012.00 62812.40 54878.34 51480.03 Current Liabilities Short term borrowings 7345.30 38760.40 46512.48 52559.10 Current maturities of Long Term Borrowings 8286.50 21047.40 27782.57 32783.43 Trade Payables 167306.50 163454.50 160185.41 156981.70 Other Current Liabilities 143526.50 139217.60 142001.95 147682.03 Short Term Provisions 20838.10 21135.20 22191.96 23079.64 3. Sub Total - Current Liabilities 347302.90 383615.10 398674.37 413085.90 Total Liabilities (1+2+3) 721742.10 783045.80 846509.81 919262.63 APPLICATION OF FUNDS Non-Current Assets a) Fixed Assets 89019.80 82372.10 86490.71 89950.33 b) Non- Current Investments 105227.00 151684.10 178987.24 204045.45 c) Long Term loans and advances 36641.70 37215.70 38704.33 39865.46 d) Other non-current assets 823.20 627.80 690.58 745.83 1. Sub Total - Non Current Assets 231711.70 271899.70 304872.85 334607.07 Current Assets Current Investment 55806.90 40462.30 33988.33 29909.73 Inventories 20641.80 19825.30 20618.31 21236.86 Trade receivables 226130.10 215387.60 221849.23 230723.20 Cash and Bank Balances 14556.60 17828.60 20681.18 23162.92 Short-terms loans & advances 54988.40 63456.50 70436.72 76071.65 Other current assets 117906.60 154185.80 174063.20 203551.20 2. Sub Total - Current Assets 490030.40 511146.10 541636.96 584655.56 Total Assets (1+2) 721742.10 783045.80 846509.81 919262.63

10. Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A (Restated) FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales 516109.60 565989.20 639567.80 709920.25 Other Income 18872.90 18808.90 19937.43 20734.93 Total Income 534982.50 584798.10 659505.23 730655.18 Expenditure -461378.20 -499319.00 -562819.66 -626149.66 Operating Profit 73604.30 85479.10 96685.57 104505.52 Interest -9547.50 -10760.80 -11836.88 -12783.83 Gross profit 64056.80 74718.30 84848.69 91721.69 Depreciation -7277.40 -7924.20 -8558.14 -9071.62 Exceptional Items 1762.40 5885.00 0.00 0.00 Profit Before Tax 58541.80 72679.10 76290.55 82650.07 Tax -15413.00 -17747.80 -19759.25 -20910.47 Profit After Tax from continuing operations 43128.80 54931.30 56531.30 61739.60 Profit before tax from discontinued operations 7788.60 0.00 0.00 0.00 Tax expense on discontinued operations -2527.00 0.00 0.00 0.00 Extraordinary Items 716.10 0.00 0.00 0.00 Net Profit 49106.50 54931.30 56531.30 61739.60 Equity capital 1230.80 1853.80 1853.80 1853.80 Reserves 289994.50 334572.00 391103.30 452842.90 Face value 2.00 2.00 2.00 2.00 EPS 79.80 59.26 60.99 66.61

11. Quarterly Profit & Loss Statement for the period of 30th Sep, 2013 to 30th June, 2014E Value(Rs.in.mn) 30-Sep-13 (Restated) 31-Dec-13 31-Mar-14 30-Jun-14E Description 3m 3m 3m 3m Net sales 123084.10 143875.10 200791.00 152601.16 Other income 4655.90 4467.80 4952.70 5249.86 Total Income 127740.00 148342.90 205743.70 157851.02 Expenditure -111227.60 -127126.80 -171781.40 -135052.03 Operating profit 16512.40 21216.10 33962.30 22799.00 Interest -2378.80 -2908.50 -3049.20 -2866.25 Gross profit 14133.60 18307.60 30913.10 19932.75 Depreciation -1925.70 -1991.70 -2138.30 -2245.22 Exceptional Items 0.00 1043.90 4841.10 0.00 Profit Before Tax 12207.90 17359.80 33615.90 17687.53 Tax -3561.50 -4952.80 -6381.10 -4740.26 Net Profit 8646.40 12407.00 27234.80 12947.27 Equity capital 1850.50 1852.10 1853.80 1853.80 Face value 2.00 2.00 2.00 2.00 EPS 9.34 13.40 29.38 13.97 Note: The results for the quarter and year ended March 31, 2014, exclude the performance of Hydrocarbon business segment, which has been transferred with effect from April 1, 2013 to L&T Hydrocarbon Engineering Limited, a wholly owned subsidiary of the Company upon sanction of the scheme by the Hon'ble Bombay High Court vide order dated December 20, 2013. Consequently, the performance for the year ended March 31, 2013 has been suitably restated. Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) 79.80 59.26 60.99 66.61 EBITDA Margin (%) 14.26% 15.10% 15.12% 14.72% PBT Margin (%) 11.34% 12.84% 11.93% 11.64% PAT Margin (%) 8.36% 9.71% 8.84% 8.70% P/E Ratio (x) 20.65 27.81 27.02 24.74 ROE (%) 14.81% 16.33% 14.39% 13.58% ROCE (%) 21.31% 20.71% 20.50% 19.52% Debt Equity Ratio 0.30 0.34 0.31 0.28 EV/EBITDA (x) 14.02 18.53 16.48 15.33 Book Value (Rs.) 473.23 362.96 423.95 490.56 P/BV 3.48 4.54 3.89 3.36

12. Charts

13. OUTLOOK AND CONCLUSION At the current market price of Rs.1648.00, the stock P/E ratio is at 27.02 x FY15E and 24.74 x FY16E respectively. Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 60.99 and Rs. 66.61 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 13% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 16.48 x for FY15E and 15.33 x for FY16E. Price to Book Value of the stock is expected to be at 3.89 x and 3.36 x respectively for FY15E and FY16E. We recommend BUY in this particular scrip with a target price of Rs.1812.00 for Medium to Long term investment. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

14. Firstcall India Equity Research: Email info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified C. Bhagya Lakshmi Diversified B. Vasanthi Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPOs, QIPs, F.P.Os,Takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071 Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089 E-mail: info@firstcallindiaequity.com www.firstcallindiaequity.com