Stoc Stock Analysis – L&T
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CONTENTS Introduction Company profile Financials
Fundamental analysis Peer Group Analysis Fundamental factors
Technical Analysis Pivot Point Daily chart
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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 trackrecord 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 and continuous polymerization reactors/finishers for the manmade fiber industry. Equipment replacement during revamps of fertilizer plants, refineries, petrochemical and chemical plants are also undertaken.
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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.
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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
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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/L
2,212.00 / 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
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--
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
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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 the past 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. www.capitalheight.com
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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 a technical 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.
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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,
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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, loader backhoes 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 Daily Weekly
20 Day 1748 1649
50 Day 1673 1793
100 Day 1646 1709
200 Day 1767 1508
Weekly Pivot SCRIPT L&T
R4 2092
R3 2004
R2 1916
R1 1877
P 1828
S1 1789
S2 1740
S3 1652
S4 1564
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L&T is moving in a channel since May 2011. It has just crossed over its 200 DMA and is in an uptrend. It has recently resisted at its upward resistance line and for the short term could see correction to 1800 level. But, iff we look at MACD, MACD it has given a positive crossover on the daily chart wh while ile it is also in overall uptrend taking support of its lower support line. And, looking at a larger picture and considering its overall bullish trend, we expect Larsen & Toubro to continue its bullish trend and test the level of 1950 – 2000 in next two months.
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In the weekly chart, the he stock is bullish for coming 2-3 months as it is has made a upside break-out, also, 200 DMA has proved to be very good support for L&T. Above this channel, next level of L&T on the chart is around 2000 where it has saw consolidation in the past. The momentum oscillator RSI has been in overall uptrend for the past 2-3 3 months and is at 59.24. Generally, RSI above 50 is considered to be averagely bullish which supports our view on the stock. Hence, ce, we expect L&T to continue its uptrend and test our target of 2000.
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