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JP Morgan downgrades L&T to 'neutral' on valuations

A Delhi Metro Rail Corporation employee looks through iron rods at the final tunnelling breakthrough of Qutub Minar and Saket stations in New Delhi June 17, 2009. REUTERS/Adnan Abidi/Files

Reuters Market Eye - J.P. Morgan downgrades Larsen & Toubro Ltd (L&T) (NSI:LT.NS - News) to "neutral" from "overweight" and maintains its target price of 970 rupees, saying the current share price adequately discounts near-term positives.

The investment bank adds it remains wary of risks associated with deteriorating working capital, higher-than-expected margin drag on overseas orders and a rise in the proportion of slow-moving orders.

JP Morgan says valuations at 18 times one-year forward earnings are not cheap for the company.

L&T shares down 0.8 percent at 1322 IST.

(Reporting by Abhishek Vishnoi)