RBS has raised its rating on Indian engineering and construction conglomerate Larsen & Toubro

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to "buy" from "hold", calling it the "best play on the broad-based longer-term Indian capex story".

It also raised the price target on the stock to 1,854 rupees from 1,800 earlier.

Shares in L&T were trading up 4.3 percent at 1,663.30 rupees at 10 a.m. (0430 GMT) in a firm Mumbai market. The shares had rallied nearly 6 percent on Thursday after the company said quarterly net profit rose 17.2 percent to 16.86 billion rupees ($374 million).

The company also maintained a strong revenue and order growth guidance for the current fiscal year.

Goldman Sachs also raised its price target on L&T to 2,006 rupees from 1,987.

However, Bank of America-Merrill Lynch cut its target price after the company warned tough competition and rising costs would crimp margins from revenue seen growing by a quarter this year.

It lowered the price target to 2,070 rupees from 2,280 rupees and said the company was facing a delay in orders. BofA-Merrill kept its "buy" rating on the stock.

"L&T reported a growth of 13/14/16% YoY in its revenues/EBITDA/PAT for Q4FY11. Although topline was 4% lower than our estimates, the company reported in-line PAT for the quarter (despite significantly higher depreciation) driven by higher-than-expected margins, lower interest costs and a higher other income.

Order inflows came in significantly higher than our expectations as a large order of Rs 58 billion (for a 3.1mtpa blast furnace) was not announced on the exchanges.

For FY12, the management has guided for a growth of 15-20% in order inflows and 25% in revenues, with expectations of a 50-75bps moderation in EBITDA margins.

We tweak our revenue estimates slightly, maintain our 12-month price target of Rs 1,900 and upgrade the stock to BUY in view of the recent price correction," said Religare report.

The company had on Thursday reported standalone net profit of Rs 1686.21 crores for the quarter ended March 2011 against Rs 1364.93 crores in the same period a year ago. Total income stood at Rs 15384.21 crores for year as against Rs 13583.25 crores last fiscal.