Larsen & Toubro has decided to list its wholly owned subsidiary L & T Information Technology. The listing, on the Nasdaq is planned by January 2001. The subsidiary has been valued at Rs.35 bn. L&T is an engineering and cement giant with engineering contributing almost 70% to its Rs.74 bn turnover (in FY99) and with cement capacity of 12 m tpa among the largest in the industry. The company’s information technology subsidiary L&T Information Technology is counted among the top 15 software companies in the country with 1,400 people.
The Boston Consulting Group had made the recommendation that L & T’s stake in L&T Information Technology (FY99 turnover: Rs.1.61 bn; net profit: Rs.368 m) be brought down through a public listing preferably on the Nasdaq. The company has now decided to divest 25% of its equity. It hopes to garner around Rs.100 bn through this divestment.
The proceeds from this divestment are expected to be used to retire L & T existing debt of Rs.33.58 bn. From L & T Information Technology’s point of view it could give the company an independent window to provide future finances as well provide the company with a currency for potential acquisitions.
L & T Information Technology is expected to clock a turnover of Rs.2.50 bn and a net profit of Rs. 500 million in the current year i.e. FY2000. The BCG report had earlier projected a turnover of Rs.30 bn and a net profit of Rs.6.50 bn by FY2005.
Market View:
Analysts view the developments positively and have rated the stock as a ‘Buy’ as the move is likely to lead to higher return on capital and shareholder value for L & T both of which have been concerns in the past.
For the quarter ended December 2020, L&T has posted a net profit of Rs 26 bn (up 5.1% YoY). Sales on the other hand came in at Rs 356 bn (down 1.8% YoY). Read on for a complete analysis of L&T's quarterly results.
Here's an analysis of the annual report of L&T for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of L&T. Also includes updates on the valuation of L&T.
For the quarter ended June 2020, L&T has posted a net profit of Rs 6 bn (down 63.9% YoY). Sales on the other hand came in at Rs 213 bn (down 28.3% YoY). Read on for a complete analysis of L&T's quarterly results.
Here's an analysis of the annual report of L&T for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of L&T. Also includes updates on the valuation of L&T.
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