stock analysis-l&t special report by capital height

8/6/2019 Stock Analysis-L&T Special Report by Capital Height

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Sto

k Analysis – L&T

www.capit

lheight.com



www.capitalheight.com

[email protected] (0731)4295950

CONTENTS

IntroductionCompany profileFinancials

Fundamental analysisPeer Group AnalysisFundamental factors

Technical AnalysisPivot PointDaily chart





Introduction

LARSEN & TOUBRO LIMITED is a major multi-dimensional conglomerate, ranked

among the top five companies in India's private sector. It holds leadership position in

most of its major domestic businesses -- engineering and construction, electrical and

electronics, cement and Information Technology.

In the engineering and construction segment, L&T's reputation is based on a track-record of success in supplying plant and equipment of unprecedented scale and

sophistication for critical industries -- oil & gas, refinery, petrochemical, chemical, power,

cement, steel and mining.

Heat Transfer Equipments

L&T deals in heat exchangers for the chemical, petrochemical, refinery and fertilizer

industries as well as the complete range of equipment for man-made fiber industries.The product range includes all types of shell and tube heat exchangers for high

pressure and high temperature applications, helix changers (with helical shell side flow

pattern), plate and spiral heat exchangers and air-cooled changers.

Critical among these are special threaded channel type closure high pressure heat

exchangers, high-pressure heat exchangers for refineries, carbonate condensers and

urea strippers for the fertilizer industry: specialized multi-tubular reactors, transfer line

exchangers and ultrasensitive exchangers for petrochemical applications andcontinuous polymerization reactors/finishers for the manmade fiber industry.

Equipment replacement during revamps of fertilizer plants, refineries, petrochemical and

chemical plants are also undertaken.





Refinery Cracker Plant Equipments

L&T offers equipment and systems for crude refineries and gas/naphtha cracker plants.

The range includes reactors/vessels/columns in carbon/alloy/stainless/c-lad/vanadium

modified alloy steel construction.

Rubber Processing Machine

L&T supplies a range of injection molding machines and systems for processing

thermoplastics and thermo sets. L&T supplies a wide range of rubber processing

machinery manufactured at its Chennai plant. Mechanical and hydraulic tyre-curing

presses with accessories like vertical chuck loaders, automatic and semi-automatic

post-cure inflators for curing tires ranging from scooter to off-the-road tyres; tube curing

presses; tube heaters; tube splicer’s, bladder curing presses; servicers; tyre-building

machines; bias cutters; batch-off units; segmented mould containers and other rubber

processing machinery.

Industrial Machinery Foundry Products

Crushing Systems & Equipment L&T manufactures a range of size reduction/screening

and feeding equipment for crushing of limestone, iron ore, gypsum, granite, glass, coal,

coke, pulp & paper Equipment etc. L&T offers machinery and equipment for production

of pulp, paper and board as per design of voith paper, Germany, equipment for Minerals

& metals industry. L&T manufactures a comprehensive range of equipment for iron and

steel and other metallurgical industries. L&T manufactures specialized bulk material

handling equipment for core sector industries like power, steel, cement, port and mines.





STOCK INFORMATION (As on Mar’11)

Sector Diversified

Market cap Rs.104102 cr

PE ratio 25.77

EPS (Rs) 65.01

Sales (Rs crore) 15,384.21

Face Value (Rs) 2.0

Net profit margin (%) 11.56

Last bonus 1:1

Last dividend (%) 725

Return on average equity 23.95

SHARE HOLDING PATTERN (As on Mar’11)

(in %) 11-Mar 10-Dec 10-Sep

Promoter -- -- --

FII 15.18 16.60 16.65

Banks Fin. Inst. and Insurance 24.61 23.99 24.10

Private Corporate Bodies 6.86 6.29 6.23

NRI's/OCB's/Foreign Others 0.86 0.79 0.79

GDR/ADR 3.56 3.88 --

Directors/Employees 0.84 0.84 0.99

Others 12.22 12.24 15.89

General public 22.99 22.16 22.17





Fundamental analysis

Quarterly Results (Rs in cr.) & Peer group competition (Rs in cr.)

Particulars L&T JP Associate Voltas Welcorp

LTP 1,711.90 84.75 164.55 172.15

Change % 2.18 -2.36 -0.99 -2.49

52 W H/L2,212.00 / 1,463.05 140.80 / 70.25

262.50 / 147.35

275.00 / 144.35

Results As On March - 2011

Sales 15,384.21 3,982.23 1,709.40 1,674.84

PAT 1,686.21 301.95 104.01 59.39

Equity -- 425.29 33.07 102.33

Ratio Analysis

OPM % 19.09 23.68 10.56 11.22

NPM % 10.96 7.58 6.08 3.55

EPS 27.7 1.42 3.15 2.9

CEPS -- 2.13 3.28 4.95

PE 26.24 15.44 15.41 9.66





Ownership As On March - 2011

Promoter &

Promoter Group

-- 99,63,06,821 10,12,81,474 8,40,58,493

Indian -- 99,61,89,061 10,12,81,474 6,94,92,970

Foreign -- 1,17,760 -- 1,45,65,523

Public 60,88,52,126 1,13,01,26,361 22,96,03,266 12,06,10,417

Institution 32,07,75,578 67,01,78,776 15,83,76,797 7,35,13,858

FII 9,24,24,949 44,11,17,271 5,66,43,359 4,72,74,751

DII 22,83,50,629 22,90,61,505 10,17,33,438 2,62,39,107

Non Institution 28,80,76,548 45,99,47,585 7,12,26,469 4,70,96,559

Bodies Corporate 4,17,54,375 14,91,69,725 59,31,173 1,50,91,071

Dividend History

DIVIDENDS L&T JP Assoc Voltas Welcorp

2011 -- 0.4 -- --

2010 12.5 0.54 2 2

2009 10.5 1.24 1.6 1.5

2008 15 1 1.35 1.5

2007 15 5.1 1 1





Fundamental Factors & Operating Divisions

Global Presence

L&T has a global presence. A thrust on international business over the years has seen

overseas revenues growing steadily. The company has manufacturing facilities in

India, China, Oman and Saudi Arabia. It has a global supply network with offices in 10

locations worldwide, including Houston, London, Milan, Shanghai, Seoul. Customers

include global majors in over 30 countries.

Overseas expansion

Larsen & Toubro, India's largest engineering, construction and technology company, is

aggressively expanding its footprint across various places abroad, as part of a vision to

become a global multinational engineering and technology major. L&T has started new

offices, mainly sales and marketing outfits, in countries such as Nigeria and South

Africa in the African continent, Brazil in Latin America and Germany in Europe in thepast few months. Further, the company is transforming its West Asia operations as a

major hub for its international business, like a 'Mini L&T based out of Gulf', with

extensive manufacturing and marketing operations, said sources.

Engineering and Construction Projects

L&T’s engineering and construction track record consists of implementation of turnkey

projects in major core and infrastructure sectors of the Indian industry.L&T has formed a joint venture with SapuraCrest Petroleum Berhad, Malaysia for

providing services to offshore construction industry worldwide. The joint venture will own

and operate the LTS 3000, a Heavy Lift cum Pipelay Vessel. L&T has more than 38000

employees in India.





L&T Power

L&T has set up an organization focused on opportunities in coal-based, gas-based and

nuclear power projects. [9] This business provides turnkey solutions for setting up utility

power plants, co-generation and captive power plants on EPC basis. It also provides

power plant engineering services through L&T Sargent & Lundy, a joint venture of L&T

and Sargent & Lundy, USA. L&T has formed two joint ventures with Mitsubishi Heavy

Industries, Japan to manufacture super critical boilers and steam turbine generators. In

2008-09, significant progress was made in setting up manufacturing facilities for super

critical boilers and turbines at Hazira, on India's west coast. L&T has also signed atechnical collaboration with Clyde Bergemann for electrostatic precipitators, a crucial

BOP item in coal based thermal power plants.

Heavy engineering

L&T is acknowledged as one of the top five fabrication companies in the world.The

Heavy engineering division manufactures and supplies custom designed and

engineered critical equipment and systems to the needs of core-sector industries and

the defence sector. It is the preferred supplier of equipment for a select range of

products, globally. L&T has a shipyard capable of constructing vessels of up to 150

metres long and displacement of 20000 tonnes ] at its heavy engineering complex at

Hazira. The shipyard is geared up to take up construction of niche vessels such as

specialized Heavy lift Cargo Vessels, CNG carriers, Chemical tankers, defense & para

military vessels and other role specific vessels.

Construction of specialized mid size vessels is being undertaken and capacity is being

augmented by additional infrastructure such as ship lift system and additional outfitting

workshops to extend the activities to ship repairs. The focus will be on construction of

commercial vessels, warships for the navy and the coast guard.





Construction

ECC – Engineering, Construction & Contracts Division of L&T – is the major contributor

of L&T's share market. Currently, it is also listed as India’s largest construction

organization. L&T covers varied disciplines of construction – civil, mechanical, electrical

and instrumentation. The design wing of L&T ECC is called EDRC (Engineering Design

and Research Centre). EDRC provides consultancy, design and total engineering

solutions to customers .

It carries out basic and detailed design for both residential and commercial projects.

L&T has expanded its focus to the Middle East, South East Asia, Russia, CIS,

Mauritius, African and SAARC countries. It also has keen interest in the markets of

Indian Ocean rim countries, Africa and Latin America.

Electrical and electronics

L&T is an international manufacturer of a wide range of electrical and electronic

products and systems. L&T also manufactures custom-engineered switchboards for

industrial sectors like power, refineries, petrochemicals and cement. [17] In the electronic

segment, L&T offers a range of meters and provides control and automation systems for

industries. Medical equipment and systems manufactured by L&T include advanced

ultrasound scanners and patient monitoring systems, ESUs, Syringe pumps,

Defibrillators, Ventilators, Anesthesia machines

Information technology

Larsen & Toubro Infotech Limited, a 100 per cent subsidiary of the L&T, offers software

solutions and services with a focus on Manufacturing, BFSI and Communications and

Embedded Systems. L&T Infotech focuses on information technology and software

services. Its clients include industry leaders like Marsh & McLennan, Standard Life,





Travelers, Chevron, Freescale, Hitachi, Ingram Micro, Infineon, Sanyo, Lafarge,

ABSAP&G, Johnson and Johnson, CitiGroup, Barclays, eCORPUS, Marathon, Texas

Instruments, Qualcomm, LG and Samsung among others. It offers services and

solutions for the following industries: banking and financial services, insurance, energy

and petrochemicals, manufacturing.

Machinery and industrial products

L&T manufacturer’s markets and provides service support for critical construction and

mining machinery – surface miners, hydraulic excavators, aggregate crushers, loaderbackhoes and vibratory compactors; supplies a wide range of rubber processing

machinery and injection molding machines; and manufactures and markets industrial

valves and allied products and a range of sophisticated application-engineered welding

alloys.

TECHNICAL VIEW CMP – Rs. 1836 Target Price – Rs. 2000

Moving averages

Moving Averages 20 Day 50 Day 100 Day 200 DayDaily 1748 1673 1646 1767

Weekly 1649 1793 1709 1508

Weekly Pivot

SCRIPT R4 R3 R2 R1 P S1 S2 S3 S4L&T 2092 2004 1916 1877 1828 1789 1740 1652 1564



L&T is moving in a channel s

is in an uptrend. It has re

short term could see correcti

a positive crossover on the d

of its lower support line.

overall bullish trend, we ex

test the level of 1950 – 2000 i

ince May 2011. It has just crossed over it

ently resisted at its upward resistance li

ion to 1800 level. But, if we look at MAC

aily chart while it is also in overall uptrend

And, looking at a larger picture and

ect Larsen & Toubro to continue its bu

n next two months.



200 DMA and

ne and for the

D, it has given

taking support

considering its

llish trend and



In the weekly chart, the sto

upside break-out, also, 200

Above this channel, next lev

consolidation in the past. The

the past 2-3 months and is

averagely bullish which supcontinue its uptrend and test

k is bullish for coming 2-3 months as it

DMA has proved to be very good su

el of L&T on the chart is around 2000 w

momentum oscillator RSI has been in ov

at 59.24. Generally, RSI above 50 is co

orts our view on the stock. Hence, weur target of 2000.



is has made a

pport for L&T.

ere it has saw

rall uptrend for

nsidered to be

expect L&T to





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stock analysis-l&t special report by capital height

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