Start of Business
Larsen & Toubro Limited, commonly known as L&T, is one of the largest Indian multi-national firms and leading construction company in India headquartered in Mumbai, Maharashtra, India.
It was founded by two Danish engineers taking refuge in India. The company has business interests in engineering, construction, manufacturing goods, information technology, and financial services, and has offices worldwide.
1938: Commences Business1944: ECC - the present Construction arm of L&T starts.
Now
- L&T is amongst the largest five fabrication companies in the world.
- It has shipyard capable of constructing vessels of upto 150 meters in length and displacement of 20000 tones. This shipyard constructs specialised heavy lift ships, CNG carriers, Chemical tankers, defence & para-military vessels submarines and other role specific vessels.
- Joint venture with Mitsubishi heavy industries to manufacture super critical boilers and steam turbine generators.
- L&T Constructions is amongst the world's top 30 contractors.
- L&T Hydrocarbon and Engineering delivers turnkey engineering and construction solutions to offshore and onshore hydrocarbon projects.
- L&T defence provides indigenous, design-to-delivery solutions across the defence spectrum – from surveillance to strike capabilities, and mobility platforms essential to enhance their effectiveness. It also offers specialised turnkey defence construction solutions like underground structures, military bases, storage depots, smart infrastructure and modernisation of existing facilities.
- A subsidiary of L&T, L&T Infotech is a global IT services and solutions provider with presence in 23 countries. With twenty-two delivery centres and a diversified work force worldwide, the business is expanding into new geographies even as it consolidates its client facing organization in North America and Europe.
- L&T Technology Services offers design and development solutions through the entire development chain in multiple industries. The Company has design and delivery locations in six centres in India, as well as two delivery centres in the US.
Share Price
The share price of Larsen and Toubro has given negative return over a period of 5 years and 1 year.
Larsen and Toubro Share Price - 5 years
Larsen and Toubro Share Price - 1 year
Financial Performance
The financial performance of the company has been good though. Sales and Profits have nearly doubled over the last 5 years.
Operating profit margins are nearly 17%, Net profit margins are nearly 10%. Sales growth is also about 10%.
But maybe it is the future which is not looking very good. As it is as compared to other consumer led, pharma and many technology business, the profit margins as well as sales growth is much lower.
If stock price is a forward discounting mechanism - then maybe L&T's stock price is reflecting the uncertainty of future. After all the company depends on large work or project contracts ( many of which are not repeat i.e. from the same customer).
However it may also be a case of overcorrection of a sector which is "out of flavour" in the current scenario.
But then how about finding a stock which provides decent returns even when the sector is - as many analysts point out "out of flavour"
(Disclaimer : This blog is for information purposes only. It is not to provide any kind of advise or recommendation or solicit any business. Stock market investing is a with risk investing including risk on principal invested. Please take an informed decision while investing in stocks)
