Brokerage firm Jeffries held talks with the management regarding L&T’s ESG. The company has assured investors that it is not involved in the activities of making cluster, munition or nuclear weapons. Jefferies meeting on the company’s defense exposure ESG ( Environmental, Social, and Governance) has also happened with the rating agency. Jefferies says that after these meetings L&T shares are re-rated. The research firm says that the capital allocation and capex in the company’s project shows that the company is showing a recovery trend. If there is any rating upgrade on ESG then it will be better for the company’s business. Therefore, it has been given a BUY rating by Jefferies.
Defense- In the financial year 2020-21, the share of defense products in L&T’s revenue has been 2.5 percent. However, the Integrated Sustainability Report states that the company is not involved in the manufacture of any explosives or any such weapon. It also does not manufacture anti-personal land mines or nuclear weapons. It does not even customize any delivery system for such a weapon. However, the ESG rating agency has expressed concern over the company’s involvement in nuclear sub-marine and Pinaka missile manufacturing.
The company’s green portfolio rose to 29.6 percent
The company’s green portfolio has reached 29.6 per cent and is growing further. In the financial year 2015-16, the revenue target of green portfolio was fixed at 25 percent, which it has been exceeded. L&T’s IT subsidiaries are earning good profits and this is the focus area of the company. Re-assessment of L&D Finance is also its priority.
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Target price rises to Rs 2,405
Jefferies has given it a Buy rating and has a target price of Rs 2,405. However, there is some risk associated with the company. The company is not balanced in capital allocation. The second thing is that the company is active in infrastructure projects and but the expenditure by the government in this has not yet reached the pre-covid level.
(The stock recommendations given in the story are those of the respective research analyst and brokerage firm. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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