Shares of this large-cap infrastructure company surged nearly 0.25 percent after committing $300 million to enter the semiconductor industry through the creation of a new company.
Share Price Movement
In Wednesday’s trading session, the share price of Larsen & Toubro (L&T) gained nearly 0.25 percent reaching an intra-day high of Rs.3,600 per share from its opening price of Rs.3,591 apiece. The share is currently trading at Rs.3,590 apiece.
What happened
Larsen & Toubro Ltd. is set to invest over $300 million to establish a chip company, aligning with the efforts of other Indian conglomerates to develop the semiconductor industry in India.
The tech-to-construction company will invest the funds over three years to create a fabless chipmaker, that focuses on designing and selling semiconductors while outsourcing their production. According to Sandeep Kumar, head of L&T Semiconductor Technologies, the company aims to design 15 products by year-end and initiate sales in 2027.
“Automotive, industrial, and energy — those are the sectors we’ve picked as they are going through a very heavy transformation,” Kumar said. “There is space to compete, succeed, and even capture the market.”
L&T Semiconductor Technologies currently employs around 250 people, mostly chip designers, and plans to double this number by the end of 2024, according to Kumar.
The company has requested government support in the form of subsidies or incentives for chip design, but will not seek external funding beyond the L&T group.
Industry Overview
Semiconductors have become an essential global resource, particularly as the US-China trade war increases the cost of chip imports. In response, countries such as the US, Germany, Japan, and Singapore are expanding their domestic chipmaking capabilities to secure a reliable supply of components vital for technologies ranging from artificial intelligence to electric vehicles.
India is currently experiencing significant growth in its semiconductor sector, driven by substantial foreign investments and government initiatives aimed at establishing a robust manufacturing ecosystem.
Financials
In its Q1 FY25 financial results, Larsen & Toubro Ltd reported revenue of Rs.55,120 crore, reflecting a 15.11 percent increase from Rs.47,882 crore in the same quarter of the previous year. The Profit After Tax (PAT) grew by 11.3 percent to Rs.3,445 crore, up from Rs.3,096 crore in the corresponding quarter of the previous year.
Company Profile
Larsen & Toubro Ltd is a global conglomerate primarily focused on delivering engineering, procurement, and construction (EPC) solutions.
The company operates in several critical sectors, including Infrastructure, Hydrocarbon, Power, Process Industries, Defence, Information Technology, and Financial Services, serving both domestic and international markets.
Written by – Siddesh S Raskar
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