Larsen & Toubro, popularly known as L&T, is an Indian multinational conglomerate specialising in engineering, infrastructure, information technology, and financial services.
The market cap of L&T as of early March 2018 is close to Rs.1,77,690 crore.
Company’s Wealth and Recent PerformanceQ1 FY 2018-19
The key financial highlights of the company’s consolidated performance for the Q1 FY 2018-19, ended 31 June 2018 are as follows:
- Profit After Tax (PAT) recorded an increase of 36% and stood at Rs.1,215 crore, up from Rs.893 crore for the same period in the previous year.
- The gross revenue recorded an increase of 18% YoY and stood at Rs.28,283 crore. The increase was attributed to growth in project and services business.
- The international revenue constituted 34% of the total revenue and stood at Rs.9,669 crore.
- In this quarter, the company bagged new orders worth Rs.36,142 crore, recording a growth of 37%. The growth was attributed to the increase in domestic ordering activity.
- International orders constituted 26% of the total order and stood at Rs.9,404 crore. The company got orders mainly from the infrastructure, hydrocarbon and heavy engineering businesses.
- The consolidated order book stood at Rs,271,732 crore and constituted 23% of the total order book.
- There was an increase of 16% YoY in orders from the infrastructure segment that were worth Rs.19,395 crore.
- Power segment’s order book stood at Rs.8,051 crore in the quarter while the order book of the heavy engineering segment stood at Rs.4,055 crore.
- Customer Revenue stood at Rs.1,341 crore, and reported an increase of 46% over the corresponding quarter of the previous year, mainly from adoption of new accounting norms under IND AS 115
The financial highlights of the company’s consolidated performance for the entire FY 2017-18, ended 31 March 2018 are as follows:
- The PAT recorded a growth of 22% on a YoY basis and stood at Rs. 7,370 crore.
- The gross revenue recorded an increase of 9% and stood at Rs.1,19,862 crore.
- The company bagged new orders worth Rs. 1,52,908 crore at the group level that recorded an increase of 7% as against the previous year.
- The international revenue constituted 33% of the total revenue during the year and stood at Rs.39,699 crore.
- Infrastructure segment recorded an increase of 11% in fresh orders worth Rs.87,277 crore.
- Power Segment registered a growth of 16% YoY and bagged fresh orders worth Rs.2,414 crore.
- The Electrical and Automation segment recorded an increase of 5% YoY and stood at Rs.5,209.
- The company’s financial services segment registered a growth of 18% in customer revenue which stood at Rs.10,064 crore.
- Larsen & Toubro’s order inflow increased by 38% y-o-y in the third quarter. Comparing the same over the last 9 months, there has been an overall increase of 8% in the order inflow of the company. Similarly, L&T’s order book also increased by 5%, taking the total value as of December 31, 2017, to Rs.2,707 billion.
- Considering the company’s revenue from operations on a like-for-like basis, it increased by 10% over the same quarter last year to Rs.287 billion. A significant increase in EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) was also recorded in the December quarter. It increased by 25% over Q3 FY17 to Rs.31 billion. Recurring PAT (Profit after Tax) also increased by 48% over the same period last year to Rs.14 billion. Their net profit also increased by 53% from over a year ago.
- L&T has done well in the domestic market, considering that its order inflow in the sector increased by more than 50%. This increase, in fact, compensated for the decrease in the numbers in the global market.
- The revenue growth was primarily driven by Larsen & Toubro’s operations in infrastructure, hydrocarbons, heavy engineering, and services sectors. These four sectors individually recorded a considerable increase in net revenue and EBITDA margin.
Larsen & Toubro Stock Trends in 2018
- The opening price on January 1, 2018, was Rs.1,264 on BSE. The closing price for the same at the end of the month was Rs.1,416. This sharp increase of more than Rs.100 was driven by the firm bagging contracts from Hindustan Petroleum Corporation Limited and Reliance Industries Limited, and Oil & Natural Gas Corporation. An excellent performance in Q3 FY18 also helped the stock price surge.
- The opening price on February 1, 2018 was Rs.1,428 on BSE, while the closing price at the end of the month was Rs.1,313. In this period, the firm continued to land several high-profile orders but owing to market turbulence worldwide, L&T stock price went down. SENSEX also shed more than 1,500 points in the month of February, 2018.
- In the month of March, the price of the stock at the beginning was Rs.1,319. The scrip changed marginally throughout the month and stood at Rs.1,301 towards the end.
- The price of the stock picked up the pace in April and increased by around 50 points to reach Rs.1,385. By the end of April, the stock price stood at Rs.1,381.
- In the month of May, the scrip had a good start at the beginning and stood at Rs.1,420. However, the stock price continued to fall throughout the month and was at Rs.1,370.
- The scrip fell by 140 points in the month of June and stood at Rs.1,235.
- In the month of July, the stock price gained strength and increased by around 35 points. The opening price of the stock by the end of July was Rs.1,299.
- The stock price was stable at the beginning of August, however, it picked up the pace towards the end of the of the month. The opening price of the L&T stock by the end of August 2018 was Rs.1,348.
Larsen & Toubro Stock Trends in 2016 and 2017
- L&T stock price at the start of 2016 was close to Rs.850. The share price slipped in the early weeks of January, despite the engineering firm landing several major contracts in the period. By early February, despite the positive developments, the price had slipped down to roughly Rs.740.
- The shares exchanged hands at roughly that amount for most of the month. Towards the end of the month, L&T entered into a long-term pact with McDermott International, which was soon followed by the firm landing another order. As a result, by early March, L&T stock price started showing signs of a steady heading on NSE and BSE.
- Throughout the months of March and April, the shares were being traded at above Rs.800. During this time, the engineering conglomerate landed several high-profile orders which led to stock price rise steadily. By the end of April, Larsen & Toubro stock price had crossed Rs.850, albeit it was only for a short while.
- In May, the share price remained above Rs.850. A small dip was observed at the end of the month owing to the resignation of the director. After touching Rs.830, the stock price rose dramatically. In a matter of four days, the L&T share price on NSE and BSE had gained more than Rs.100. By early June, the stocks were being traded at roughly around Rs.980.
- By mid-June, it had become evident that the price will cross Rs.1,000 when L&T were chosen as main contractors for the FIFA World Cup in Qatar. In July, shares were being traded at more than Rs.1,030, driven by the firm landing the Mumbai Metro contract. Up until early August, the price remained above Rs.1,000 before slipping in the Rs.900 domain again. However, this dip was not that serious as the stock price stayed above Rs.950. The company also gave a dividend of 912.5% in mid-August.
- Things stayed roughly the same through September and October. The stock price of L&T did not vary dramatically and stayed well above Rs.970. However, things changed in early November when the prices took a dive owing to demonetisation and other factors. It is worth mentioning that SENSEX also took a dive in the same period.
- The share price in December stayed close to Rs.900 on the back of bearish market trends and weak global cues. The closing price at the end of the year was roughly Rs.899.
- The opening price in early January 2017 was roughly Rs.904 on NSE and BSE. By the end of the month, the price had crossed Rs.960. Things didn’t vary significantly in the month of February. The share price inched cautiously towards Rs.1,000 and it managed to achieve this feat once again by mid-March. This was driven by L&T landing a couple of major projects in the period. A sharp spike towards the end of March was observed in the stock price owing to the firm landing a major residential order. As a result, by early April, the shares were trading at around Rs.1120.
- The price kept on rising through May on the back of L&T bagging a couple of important orders. At the end of May, the closing price was Rs.1,173.
- L&T share price dipped slightly in June driven by a weak SENSEX performance. However, the price began a steady recovery in July when bonus in 2:1 ratio was announced. This, coupled with a few other developments drove the stock price up once again. On July 31, 2017, the closing price on NSE and BSE was close to Rs.1,193.
- However, early August witnessed a sharp dip in the share price. Global trends, L&T disinvestment, along with weak SENSEX cues drove the price down. By the end of the month, the price was hovering around Rs.1,140.
- In September, the price recovered splendidly to peak at Rs.1,250. However, this rally didn’t last for long and the price went down to enter the Rs.1,130 domain again. It stayed this way for most of October.
- Nonetheless, the prices recovered once again after L&T bagged a couple of new orders. For most of November and December, the share price stayed above Rs.1,200 driven by new orders and projects. The closing price at the end of December 2017 was roughly Rs.1,258 on NSE and BSE.
Should you invest in Larsen & Toubro stocks?
- L&T is a market leader when it comes to infrastructure and engineering, and it has landed several crucial projects over the years. From a long-term perspective, India needs to expand and develop its infrastructure sector to boost its economy and be on par with developed nations in the world. As the Government of India is expected to increase its expenditure on the infrastructure development in the future, major engineering firms are set to benefit from it.
- L&T is definitely among the most reputed engineering firms in the country and one of the first players in the sector to benefit from the upcoming developments. Their revenue and profits have been consistent over the years, and given the company’s strong foundations, it is expected to remain that way in the foreseeable future.
- However, considering that markets around the world are likely to suffer a setback this year owing to a proposed hike in the interest rates by the U.S Federal Reserve, L&T stock price may incur a slight reduction. This may make the entry point more favourable, in comparison to purchasing L&T shares at around Rs.1,290. The ideal thing here would be to purchase stocks at every dip. Alternately, one can also look at mutual funds which have holdings in Larsen & Toubro. It is advisable to perform a thorough research before investing.
Larsen & Toubro Limited, also known as L&T, is an Indian, multinational engineering firm based in Mumbai, India. It primarily operates in infrastructure, power, information technology, heavy engineering, hydrocarbon, financial services, et cetera, and has a global presence. Having been around the block for more than 70 years, it has become a household name synonymous with engineering and development. L&T is committed to developing core sectors of the Indian economy and has employed more than 85,000 people across all its operations.
History of the Company
Larsen & Toubro’s roots can be traced back to a company founded in 1938 by two Danish engineers - Henning Holck-Larsen and Soren Kristian Toubro. Back then, the company was focussed on manufacturing dairy equipment but following the World War 2, it shifted to undertaking jobs and providing services. Over the years, L&T also expanded into engineering and construction sectors and in 1946, Larsen & Toubro Limited was formed.
Following the independence of India in 1947, L&T set up offices in Kolkata, Chennai, and New Delhi.
A.M. Naik - Chairman of the Group
Mr. Naik started his journey at L&T as an engineer back in 1965. Over the years, he rapidly rose through the ranks owing to his sheer professionalism and dedication. He has held several positions in the company, ranging from General Manager to CEO, which eventually led to his appointment as the Chairman and Managing Director in December, 2003. Before serving as the Group Chairman, he served as the Executive Chairman of L&T from 2012-17. Under his leadership, the company overcame many obstacles to become the market leader that it is today.
Mr. Naik has received a plethora of awards and honours, the most notable of which is the Danish Knighthood, conferred to him by Her Majesty Queen Margrethe in 2008, and the Order of the Dannebrog in 2015.
S.N. Subrahmanyan - Chief Executive Officer and Managing Director
Mr. Subrahmanyan is the CEO and MD of Larsen & Toubro, and he began his career at L&T as a project planning engineer. Over the years, he has played an important role in completing several projects across various categories, the most notable of which was managing the engineering, construction and procurement contracts of four international airports - Bengaluru, Hyderabad, Delhi and Mumbai. He has also headed and won several major projects in countries like Qatar, Oman, and Saudi Arabia.
Apart from serving as the CEO and MD, he also heads the L&T Construction and serves as the Vice Chairman on the Boards of L&T Technology Services and L&T Infotech.
Larsen & Toubro Listings in NSE, BSE & Indices
L&T stocks are available for trading on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The codes for the same mentioned below:
BSE Code - 500510
NSE Code - LT
ISIN - INE018A01030
Sector - Infrastructure, General
Apart from this, the global depository receipts (GDR) of L&T are also available on London Stock Exchange (LSE) and Luxembourg Stock Exchange.
Larsen & Toubro is a part of the two benchmark indices in India, BSE SENSEX and NIFTY 50. Apart from these, L&T also comprises NIFTY 200, NIFTY 500, S&P BSE 100, S&P BSE SENSEX 50, et cetera.
Larsen & Toubro Limited
L&T Estate House, N.M. Marg,
Mumbai, Maharashtra - 400-001
Stocks vs. Mutual Funds: here's what we recommend
Stock market investments require a lot of research and knowledge. They do not generally offer any tax benefits and are regarded as high-risk investments. Hence,it is crucial to have a diversified portfolio. At Bankbazaar, we encourage our readers to invest on mutual funds.It doesn't require a lot of knowledge and equity linked mutual fund schemes offer tax benefits. Additionally, since mutual funds comprise stocks from multiple companies, they help in building a diversified portfolio.