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DEFINITION OF 'INITIAL PUBLIC
OFFERING - IPO'
The first sale of stock by a private
company to the public. IPOs are
often issued by smaller, younger
companies seeking the capital to expand,
but can also be done by large privately
owned companies looking to become
publicly traded.
In an IPO, the issuer obtains the
assistance of an underwriting firm, which
helps it determine what type of securityto issue (common or preferred), the best
offering price and the time to bring it to
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market.
Also referred to as a "public offering".
IPOs can be a risky investment. For the
individual investor, it is tough to predict
what the stock will do on its initial day of
trading and in the near future because
there is often little historical data with
which to analyze the company. Also, most
IPOs are of companies going through a
transitory growth period, which are
subject to additional uncertainty
regarding their future values.
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HISTORY OF LARSEN AND TOUBRO
The company was founded
inMumbai in 1938 by two Danish
engineers, Henning Holck-
Larsen and Sren Kristian Toubro. The
company began as a representative of
Danish manufacturers of dairy equipment.
However, with the start of the Second
World War in 1939 and the resulting
restriction on imports, the partners started
a small workshop to undertake jobs and
provide service facilities.
http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/S%C3%B8ren_Kristian_Toubrohttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Henning_Holck-Larsenhttp://en.wikipedia.org/wiki/Mumbai7/29/2019 History of Larsen and Tubro
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(HENNING HOLCK-LARSEN)
(SOREN KRISTIAN TOUBRO)
4.7.1907 - 27.7.2003
27.02.1906 4.3.1982
Germany's invasion of Denmark in 1940
stopped supplies of Danish products. Thewar-time need to repair and refit ships
offered L&T an opportunity, and led to
the formation of a new company, Hilda
Ltd., to handle these operations. L&T also
started two repair and fabrication shops
signalling the expansion of the company.
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The sudden internment of German
engineers in India (due to suspicions
caused by the War), who were to put up a
soda ash plant for the Tatas, gave L&T a
chance to enter the field of installation.
In 1944, ECC was incorporated by the
partners; the company at this time was
focused on construction projects
(Presently, ECC is the construction division
of L&T). L&T decided to build a portfolio
of foreign collaborations. By 1945, the
company represented British
manufacturers of equipment used tomanufacture products such as
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hydrogenated oils, biscuits, soaps and
glass.
In 1945, the company signed an
agreement with Caterpillar Tractor
Company, USA, for marketing earth
moving equipment. At the end of the war,
large numbers of war-surplus Caterpillar
equipment were available at attractive
prices, but the finances required were
beyond the capacity of the partners. This
prompted them to raise additional equity
capital, and on 7 February 1946, Larsen &
Toubro Private Limited was born.
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Post Independence
Independence and the subsequent
demand for technology and expertise
offered L&T the opportunity to
consolidate and expand. Offices were set
up in Kolkata (Calcutta), Chennai (Madras)
and New Delhi. In 1948, fifty-five acres of
undeveloped marsh and jungle was
acquired in Powai, Mumbai. That
uninhabitable swamp is presently a
manufacturing landmark.
In December 1950, L&T became a
public company with a paid-up capital of
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Rs.2 million. The sales turnover in that
year was Rs.10.9 million. Notable orders
executed by the Company during this
period included the Amul Dairy at Anand
and Blast Furnaces at Rourkela Steel Plant.
With the successful completion of thesejobs, L&T emerged as the largest erection
contractor in the country.
In 1956, a major part of the company's
Mumbai office moved to ICI House in
Ballard Estate, Mumbai; which would later
be purchased by the company and
renamed as L&T House, its presentCorporate Office. The sixties were also a
decade of rapid growth for the company,
http://en.wikipedia.org/wiki/Rourkela_Steel_Planthttp://en.wikipedia.org/wiki/Rourkela_Steel_Plant7/29/2019 History of Larsen and Tubro
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and witnessed the formation of many new
ventures: UTMAL (set up in 1960), Audco
India Limited ( 1961), Eutectic Welding
Alloys (1962) and TENGL (1963).
In 1976, Holck-Larsen was awarded the
Magsaysay Award for International
Understanding in recognition of his
contribution to India's industrial
development. He retired as Chairman in
1978.
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Operating Divisions
Engineering and ConstructionProjects.
L&T Power.
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Heavy engineering.Construction.Electrical and electronics.Information technology.L&T machinery & industrialproducts.
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Subsidiaries & Joint
Ventures
L&T - Komatsu Limited.L&T Finance.Larsen and toubro infrastructurefinance.
L&T Integrated EngineeringServices (IES).
L&T Valves.
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L&T finance holdings limited a
subsidiary of Larson & tourbo issues initialpublic offering of equity shares with a
face value of rs.10 with price of band of
rs.51 to rs.59 per share. L&T finance
holdings limited incorporated in 2008,
which offers a wide range of financial
products and services. The company is
promoted by Larson & toubro limited,
one of the leading companies in India.
The L&T finance holdings limited
issues IPO of around 2.11 crore to 2.44
crore equity shares to raise around
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rs.1245 crore. The IPO is 100% book built
issue and one can bid for a minimum of100 equity shares and the multiple of 100
equity shares thereafter.
The issue already opened today, 27th
July, 2011 and will be closed on 29th
july,2011. This is a grade 5 IPO which
indicates strong fundamentals. The shares
will be listed will be listed in both BSE and
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NSE , the book running lead managers
(BRLMs) are Citigroup global marketsIndia private limited, HSBC securities &
capital markets Pvt. ltd and JM financial
consultants Pvt. ltd and the registrar is
sharepro services Pvt. ltd.
The bankers for issuing IPO are axis
bank ltd, OBS bank ltd, city union bank
ltd, Dhanlaxmi bank ltd. The federal bank
ltd, Citibank N.A, the hongkong &
shanghai banking corporation ltd., ICICI
bank ltd, IDBI bank ltd, state bank of India
and HDFC bank ltd.
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L&T Finance Holding IPOIssue Detail:
Issue Open: Jul 27, 2011 - Jul 29,
2011
Issue Type: 100% Book Built Issue
IPO
Issue Size: Equity Shares of Rs. 10
Issue Size: Rs. 1,245.00 Crore
Face Value: Rs. 10 Per Equity Share
Issue Price: Rs. 51 - Rs. 59 Per
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Equity Share
Market Lot: 100 Shares
Minimum Order Quantity: 100
Shares
Listing At: BSE, NSE
Till 29 July 2011, Final Subscription
Qualified Institutional Buyers (QIBs): 1.93times
Non Institutional Investors: 6.18 times
Retail Individual Investors (RIIs): 9.61
times
Employee Reservations: 1.53 times
Others: 3.35 times
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Total Subscription: 5.34 times (L&T
Finance IPO Subscribed)
Capital Structure
Pre Issue Equity: Rs. 1477.02crs
Post issue Equity: Rs. 1748.04crs
Listing: BSE & NSE
Lead Managers: JM Financial Consultants
Pvt. Ltd, Citigroup Global Markets IndiaPvt. Ltd, HSBC Securities & Capital
Markets (India) Pvt. Ltd, Barclays
Securities (India) Pvt. Ltd, Credit Suisse
Securities (India) Pvt. Ltd
Co- Book Lead Manager: Equirus Capital
Pvt. Ltd.
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Registrar to issue: SharePro Services
(India) Pvt. Ltd
L&T Finance Holdings, a subsidiary of
engineering conglomerate L&T opens its
IPO for subscription today for Jul 27, 2011aggregating to Rs 1,245crores. The IPO
was subscribed 0.46 times on Day 1.
The IPO received bids for 9.82crore
shares, compared with 21.45crore shares
on offer. The company has fixed a price
band of Rs 51-59 per share. The company
is aiming for a 17% stake dilution.The issue closed on Friday, 29 July
2011.
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L&T Finance Holdings on Tuesday said
the company has raised around Rs.
153crore from anchor investors for its
initial public offer, which opened for
subscription yesterday.
The company is allocating equity
shares to anchor investors at a price of Rs.
56 apiece, aggregating to Rs. 153crore.
"The Reserve Bank of India's higher-than-expected hike on Tuesday weighed
on the anchor investment in L&T Finance
Holdings at the company has raised Rs
153crore by placing shares of threeinstitutional investors at Rs 56 per share",
says a report by Nirmal Bang Securities.
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Earlier, the company had raised around
Rs 330crore through private equity from
Capital International PE Fund through a
pre-IPO placement.
The proceeds from the issue will be
used to augment the capital base of L&T
Finance and L&T Infra and to meet the
capital requirements arising out of
expected growth in their assets, primarily
the loan portfolio.
Currently the parent firm Larsen &
Toubro (L&T) holds 95.94 per cent in the
company and the remaining 4.06 per cent
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is held by private equity fund Capital
International. Post listing, parent L&T's
stake in the company would come down
to 83 per cent.
L&T Finance Holdings offers diverse
range of financial products and services
across corporate, retail and infrastructure
finance sectors through its wholly owned
subsidiaries.
Lots of brokerages are bullish on L&T
Finance Holding IPO and suggested to
subscribe keeping long- term perspective
in mind.
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Nirmal Bang
Securities
"L&TFH shares is offered at 2.04x P/BV
and 16.9x P/E calculated at higher band of
price for FY12E as compared to its peersthe offer looks fairly priced for near term
and does not offer a potential upside on
listing. However, we believe with
diversified credit portfolio, L&T Finance
can weather these issues better than its
peers.
Eastern Financers
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Eastern Financers has advised investors
to 'Subscribe' to the initial public offering
of L&T Finance Holding. The issue is
attractively priced as compared to peers.
Although the company currently has a
relatively smaller book size compared to
its peers but the business model is
scalable and the growth opportunities in
these segments continue to remain high.
Aditya Birla
Money
Aditya Birla Money has recommendedlong term investors to 'Subscribe' to the
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initial public offering of L&T Finance
Holdings.
Given the pedigree and trust, it is an
excellent long term bet; however listing
gains would largely be a function of
market conditions and going by the
current market parity, we believe the short
term gains would be at best marginal.
Therefore recommend long term investors
to subscribe to this issue," the report said
Sharekhan Ltd
Sharekhan is of the view that the initialpublic offering of L&T Finance Holdings is
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available at a marginal premium to
players like IDFC and PFC.
"The issue is priced at 2.3x FY2011
book value (BV; based on post issue
equity) which is at a marginal premium to
players like IDFC, PFC etc though the
business model is not strictly comparable.
SMC
SMC has advised investors with longterm perspective to consider the initial
public offering of L&T Finance.
Considering the P/E valuation on the
upper end of the price band of Rs 59, thestock is priced at pre issue P/E of 22.20x
on its annualised FY11 EPS of Rs 2.66.
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L&T Finance Holdings has opened its
IPO on 27th July 2011 in the price band
of Rs 51-59.
This is the biggest IPO issue of this
financial year and the company expects to
Rs 1,092 crore out of the total issue size
of Rs 1,245 crore. It is expected to be
listed at a price of Rs 64, 65. Brokerage
Nirmal Bang has advised investors withlong term perspective to subscribe to the
initial public offering of L&T Finance
Holdings. The issue looks fairly priced for
the near term, the brokerage said, but
warned that it does not offer a potential
upside on listing.
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L&T Finance Holdings Ltd (LFHL) is
financial holding company offering a
diverse range of financial products and
services across the corporate, retail and
infrastructure finance sectors, as well as
mutual fund products and investmentmanagement services, through its direct
and indirect wholly owned subsidiaries.
LFHL is registered with the RBI as an
NBFC-ND-SI. It is promoted by Larsen &
Toubro Limited (L&T), one of the
leading companies in India, with interests
in engineering, construction, electrical and
electronics manufacturing and services,
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information technology and financial
services.
L&T Finance IPO hits its 1st Day in
Market
L&T Finance Holdings hit the primary
market on July 27, 2011. The IPO was
subscribed 46%on the first day of the
issue. The price band decided for the IPO
is Rs. 51 to Rs. 59 per share. The issue
http://www.goodreturns.in/news/2011/07/28/finance-ipo.htmlhttp://www.goodreturns.in/news/2011/07/28/finance-ipo.html7/29/2019 History of Larsen and Tubro
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closes on July 29, 2011. The IPO received
bids for 9.82crore shares, compared with
21.45crore shares on offer.
The company has intended to raise Rs
12.45 billion from this initial public
offering. The company has raised aroundRs 1.6 billion by selling shares to its
anchor investors those are DSPBlackRock,
and investment arms of Malaysia's
Khazanah and U.S. private-equity fund
Capital
International. The company has raised
almost Rs. 153.04crore by selling 2.73
shares at Rs. 56each.
http://www.goodreturns.in/news/2011/07/28/finance-ipo.htmlhttp://www.goodreturns.in/news/2011/07/28/finance-ipo.html7/29/2019 History of Larsen and Tubro
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two of its subsidiaries - L&T Finance and
L&T Infrastructure Finance.
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Indian shares end down 2nd Day; banks,
L&T fall
Indian shares declined for the second
day, closing nearly 1 percent lower on
Wednesday, with financials leading the fallon concerns their margins could shrink in
the near term. Weak world markets also
kept the sentiment subdued. Banks have
been raising their deposit rates to fend
off tight cash conditions, while building
inflation pressure is expected to trigger a
hawkish monetary stance by the central
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bank, a move that could douse demand
for loans
Deposit rates are shooting up and it
doesnt look like lending rates will keep
pace with them. This will impact banksnet interest margins, Ambareesh Baliga,
vice-president of Karvy Stock Broking,
said.
Also, asset quality is a big concern.
And the RBI (Reserve Bank of India) may
also hike rates to contain inflation.
The Reserve Bank of India, which had
raised rates six times in 2010 before
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pausing in December, is widely expected
to hike key rates at its policy reviewscheduled for Jan. 25.[ID:nBMA009267]
The 30-Share BSE index .BSESN closed
0.96 percent, or 197.62 points, lower at20,301.10 points, with 24 of its
components closing in the red.
Volume was low with only 308 millionshares changing hands on BSE, where
declining shares were nearly double the
advancing ones.
The benchmark index climbed 17.4
percent in 2010, backed byrecord foreign
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fund investment of $29.3 billion. Leading
lenders State Bank of India (SBI.BO), ICICIBank (ICBK.BO) and HDFC Bank (HDBK.BO)
shed between 1.3 percent and 3.1
percent. Larsen & turbo (LART.BO)
L&T Finance Holdings IPO slips below
issue price
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Shares ofL&T Finance Holdings , a
subsidiary of engineering and
construction company Larsen and
Toubro , debuted below the issue price of
Rs 52 a share on August 12.
At 9:48 hours IST, the stock was trading atRs 51.35, down 1.25%. It has touched a
high of Rs 53.85, which was the opening
price and low of Rs 49.30 a share.
Traded volume on the National Stock
Exchange was more than three crores
equity shares.
CMD of L&T, AM Naik said L&T
Finance's contribution in the entire group
would go up to 30% from 10% in future.
http://www.moneycontrol.com/india/stockpricequote/finance-investments/lt-finance-holdings/LFHhttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/finance-investments/lt-finance-holdings/LFH7/29/2019 History of Larsen and Tubro
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L&T Finance received Rs 1,245crore
through the issue. Parent company L&T's
stake in the company reduced to 83%
post issue.
Company intends to use issue proceeds
for augmenting the capital base of L&TFinance and L&T Infra to meet the capital
requirements arising out of expected
growth in their assets, primarily the loan
portfolio.
Issue Subscription Detail / CurrentBidding Status
Number of Times Issue is Subscribed (BSE + NSE)
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As on
Date &
Time
Qualified
Institution
al Buyers
(QIBs)
Non
Institutional
Investors
(NIIs)
Retail
Individual
Investors
(RIIs)
Employ
ee
Reserva
tions
Others Total
Shares
Offered
/
Reserve
d
75,382,41
631,617,647
73,774,510
10,204
,082
23,529
,412
214,50
8,067
Day 1 -
Jul 27,
2011
17:00
IST
0.6400 0.3900 0.4600 0.0300 0.1700 0.4600
Day 2 -Jul 28,
2011
17:00
IST
0.7200 0.5000 2.2100 0.5100 0.9600 1.2200
Day 3 -
Jul 29,
2011
19:45
IST
1.9300 6.1800 9.6100 1.5300 3.3500 5.3400
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L&T Finance IPO ListingDate
Listing Date: Friday, August 12, 2011
BSE Scrip Code:533519
NSE Symbol: L&TFH
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Listing In: B Group of Securities
Sector:
ISIN: INE498L01015
Issue Price: Rs. 52.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share
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Listing day Trading
Information
Particulars NSC BSC
Issue Price Rs.52.00 Rs.52.00
Open Rs.53.85 Rs.51.00
Low Rs.49.30 Rs.49.50
High Rs.53.85 Rs.52.50
Last Trade Rs.50.05 Rs.49.95
Volume 98,188,155 44,321,154
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Balancesheet - Larsen & Toubro Ltd.
Particulars Mar'11 Mar'10 Mar'09 Mar'08 Mar'07
Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months
Share Capital 490.08 145.53 117.14 58.47 56.65
Reserves & Surplus 21,334.05 18,142.82 12,317.96 9,470.71 5,683.85
Net Worth 21,846.26 18,311.64 12,459.69 9,555.08 5,768.43
Secured Loans 1,063.04 955.73 1,102.38 308.53 245.40
Unsecured Loans 6,098.07 5,845.10 5,453.65 3,275.46 1,832.35
TOTAL LIABILITIES 29,007.37 25,112.47 19,015.72 13,139.07 7,846.18
Assets
Gross Block 8,897.02 7,235.78 5,575.00 4,188.91 2,876.30
(-) Acc. Depreciation 2,220.82 1,727.68 1,421.39 1,242.47 1,122.83
Net Block 6,654.07 5,484.81 4,129.02 2,920.54 1,725.54
Capital Work in Progress. 785.00 857.66 1,040.99 699.00 471.22
Investments. 14,684.82 13,705.35 8,263.72 6,922.26 3,104.44
Inventories 1,577.15 1,415.37 5,805.05 4,305.91 3,001.14
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Sundry Debtors 12,427.61 11,163.70 10,055.52 7,365.01 5,504.64
Cash And Bank 1,730.35 1,431.87 775.29 964.46 1,094.43
Loans And Advances 19,499.23 12,662.55 7,198.85 3,861.10 2,449.14
Total Current Assets 35,234.34 26,673.49 23,834.71 16,496.48 12,049.35
Current Liabilities 26,139.56 19,443.77 15,211.04 11,892.75 8,362.01
Provisions 2,233.43 2,188.36 3,066.53 2,035.42 1,180.13
Total Current Liabilities 28,372.99 21,632.13 18,277.57 13,928.17 9,542.14
NET CURRENT ASSETS 6,861.35 5,041.36 5,557.14 2,568.31 2,507.21
Misc. Expenses 0.00 0.00 0.26 3.06 9.84
TOTAL ASSETS (A+B+C+D+E) 29,007.37 25,112.47 19,015.72 13,139.07 7,846.18
CURRENT SHARE PRICE
Open price - 1352.50 High price - 1381.75 Low price -1341.00 Prev. close - 1364.45 Average price - 1362.78 No. of contracts traded - 12,797
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Turnover (Rs. In lakhs) - 43,598.74 Market lot - 250 Open interest - 5,136,750 Open interest change - 62,250 Open interest change % - 1.23
SHARE PRICES FROM 2011TO 2012
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Year Open High Low Close Volume
Feb-11 1484.70 1514.95 1463.05 1496.70 287451
Apr-11 1666.50 1675.00 1643.45 1650.95 252960
Jun-11 1642.70 1685.00 1642.00 1682.35 292438
Aug-11 1736.30 1768.00 1736.60 1762.90 97880
Oct-11 1347.00 1347.00 1303.35 1318.25 536399
Dec-11 1305.00 1325.00 1286.60 1296.70 454011
Feb-12 1319.00 1321.00 1278.00 1310.60 703549
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CONCLUSION
Current financials till 26th Aug 2011
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L & T has performed robustly in all itsparameters over the last 10 years. Its
impressive fundamentals in the past form
a strong base for its future.
L&T has clocked an impressive CAGR of
67% in its EPS which has been possible
due to the strong investment back into
the business which is evident from itshigh BVPS CAGR of almost 50%. Also, it
has improved its margins over the years
from a stagnant average of 10-11% from
FY 03 to FY 06 to 15% in the last 4 years.
In fact in 2010 the companys operating
margin has increased to 19%.
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Its Sales have registered a CAGR of 19.6%
over the last 10 years, indicating a good
order inflow over the years. Over the past
5 years the CAGR of order inflows has
been 33%. This has helped the company
register an impressive 67.2% CAGR overthe last 10 years.
Share prices went up till August 2011
but it dipped drastically after that and
there was a slight growth in February
2012. Now it is expected to grow further.
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