Shares of a large-cap stock gained 3.36 percent on Friday’s intraday trades to hit a fresh 52-week high of ₹ 2573.35 apiece on the National Stock Exchange (NSE) after the company bagged a mega-order and announced a merger of its two wholly owned subsidiaries.
Mega Order
Larsen and Toubro informed the bourses that the National High-Speed Rail Corporation Limited (NHSRCL) has formally awarded the mandate to construct the 135.45 km stretch MAHSR – C3 package which is part of the prestigious Mumbai Ahmedabad High-Speed Rail Project to L&T’s Heavy Civil Infrastructure business.
This package includes the construction of viaducts, stations, major river bridges, depots, tunnels, earth structures, stations, and other auxiliary works. The company did not disclose the exact value of the order, but it mentioned that it classifies any order above ₹ 7,000 crores as a ‘mega’ order.
The Mumbai- Ahmedabad High-Speed Rail project, also known as MAHSR Bullet Train project, will cover a stretch of 508 Km, spanning across Maharashtra (155.76 km), the e Union Territory of Dadra & Nagar Haveli (4.3 km) and Gujarat (348.04 km) with 12 stations along the route. The rail will operate at a speed of 320 kmph, covering the entire distance in approximately 2 hours with limited stops and in 3 hours with all stops.
Merger of Subsidiaries
The board of directors of L&T Innovation Campus (Chennai) (LTICC)at its meeting held on July 19, 2023, has announced its merger with L&T Seawoods Limited (LTSL), Navi Mumbai, subject to regulatory approvals and the approval of the shareholders.
The scheme of merger has been announced to simplify the ownership structure and for achieving cost synergies and operational efficiencies. All assets and liabilities of LTICCL shall form part of LTSL with effect from the appointed date of April 1, 2023. LTSL will issue 74,38,796 shares to the company in consideration for the merger, and no cash consideration is involved in the proposed scheme.
Larsen and Toubro is a $ 23 billion Indian multinational engaged in engineering, procurement and construction (EPC) projects in sectors such as infrastructure, hydrocarbon, power, process industries and defence, information technology and financial services in domestic and international markets.
The company’s share price rose by 15.65 percent on a year-to-date basis, by 46.22 percent in the past year and by 96.81 percent in the past five years.
With a market capitalization of ₹ 3,49,946 crores, Larsen and Toubro is a large-cap company. It has a high return on equity of 12.19 percent and a debt-to-equity ratio of 1.35. Its shares were trading at a price-to-earnings ratio (P/E) of 33.43, which is higher than the industry P/E of 8.51, indicating that the stock might be overvalued as compared to its peers.
Retail investors hold a 39.45 percent stake in the company followed by foreign institutions with 25.24 percent, other domestic institutions with 17.85 percent and mutual funds with 17.46 percent.
Written by Simran Bafna
