ANALYSIS OF HEAVY ENGINEERING
COMPANY
Presented By:
Pragya Jaiswal
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LARSEN & TOUBRO
The evolution of L&T into the country's largest engineering and construction
organization is among the most remarkable success stories in Indian
industry.
L&T was founded in Bombay (Mumbai) in 1938 by two Danish engineers,
Henning Holck-Larsen and Soren Kristian Toubro. Both of them were
strongly committed to developing India's engineering capabilities to meet the
demands of industry.
Beginning with the import of machinery from Europe, L&T rapidly took on
engineering and construction assignments of increasing sophistication.
Today, the company sets global engineering benchmarks in terms of scale
and complexity.
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Latest Facts
• Sector: Engineering & Construction
• Bse code:500510
• Nse code: LT
• 52 week NSE(high-low)(Rs):2010-1390
• 52 week BSE(high-low)(Rs):2000.90-1371
• Current market price(Rs): 2019.15
• Market capitalization:122678.16
• P/E: 21.14
• L&T-Komatsu bags Energy Efficiency & Conservation Award(2010)
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"The company that we run has a strong heritage of professionalism that
places the highest value on merit and integrity. In the 70th year of the
existence of L&T, all the directors on our board are conscious of our
responsibility in transforming the organisation to make it truly world class,
to ensure its continued long term success and growth.“
A. M. Naik: Chairman & Managing Director of Larsen & Toubro
Mr. A.M. Naik Wins ‘CEO of the Year’ Award from ISTD, Bangalore
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Fundamental Analysis
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L & T Ltd.
EXPECTED
PARTICULARS 2006 2007 2008 CAGR 2009 2009
Sales 16657.75 20678.81 29160.54 32.31% 38582.0388 39724.76
Other Income 736.14 1548.47 2144.69 70.69% 3660.7206 3611.83
Total Income 17393.89 22227.28 31305.23 34.16% 41997.8433 43336.59
Direct Expenses 9800.97 12287.89 18582.52 37.69% 25587.1776 23357.61
Gross Profit 7592.92 9939.39 12722.71 29.45% 16468.9166 19978.98
Operating Expenses 5334.42 6287.93 8186.22 23.88% 10141.0171 12899.3
EBDIT 2258.5 3651.46 4536.49 41.73% 6429.3918 7079.68
Depreciation 243.52 342.32 505.86 44.13% 729.0850 685.66
EBIT 2014.98 3309.14 4030.63 41.43% 5700.6454 6394.02
Interest Paid 277.52 304.9 579.22 44.47% 836.7933 1297.41
EBT 1737.46 3004.24 3451.41 40.94% 4864.4912 5096.61
Provision for Direct Tax 431.34 732.72 1180.02 65.40% 1951.7500 1388.74
Tax (%) 24.83% 24.39% 34.19% 17.35% 40.1224% 27.25%
EAT 1306.12 2271.52 2271.39 31.87% 2995.3393 3707.87
EBITA MARGIN 0.135583 0.17658 0.155569 7.12% 0.1666 0.178218
EPS 96.86 80.94 77.74 -10.41% 69.6488 1
63.32
TRENDS
EPS Book value per share
120
400
100 350
300
80
250
60 EPS 200 Book value per share
150
40
100
20 50
0
0
2006 2007 2008 2009 2010 2006 2007 2008 2009
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TRENDS
N ET S A LES & EA T
45000
40000
35000
30000
25000
EAT
NET Sal e s
20000
15000
10000
5000
0
2006 2007 2008 2009
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RATIO
TARGET PRICE 907.05
430063475.128
Outstanding Shares 134848582 280633567 292171041 47.20% 8 585577324
Market Value(Closing in Rs.) 541.69 793.7 1840.18 84.31% 3391.6814 689.2
Book value 368.1521842 246.640132 370.711278 0.35% 371.9975 238.870247
222738862127.9
MARKET CAPITALIZATION 73046128383.58 0 537647306227.38 171.30% 1458638291162.57 403579891700.80
Net sales per share 1235.29293 736.8616029 998.0640073 -10.11% 897.1243 678.3862416
P/E ratio 5.593 9.806 23.670 13.023 10.603
P/S ratio 0.4385 1.0771 1.8437 105.05% 3.7806 1.0159
ROE 26.31% 32.82% 20.97% -10.72% 0.19 26.51%
PRICE/BOOKVALUE 1.47 3.22 4.96 0.84 9.12 2.89
ROA (NET INCOME/TOTAL
ASSETS 7.94% 9.13% 6.69% -8.19% 0.06 7.46%
CURRENT RATIO 1.546643807 1.597890644 1.264406529 -9.58% 1.14 1.309251863
DEBT EQUITY RATIO 0.704420201 0.929239838 1.137083826 27.05% 1.44 1.456140752
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L&T
• Topline growth: 32.31%
• Bottomline growth: 31.87%
• EBIDTA margin: 7.12%
• Target price: 907.05
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VALUE ANCHOR
TARGET PRICE: Projected EPS*P/E ratio
69.65*13.023=907.05
VALUE RANGE(@10%):Rs817.05 – Rs997.755
MKT.PRICE DECISION
• Less than 817.05 Buy
• Between 817.05 to 997.755 Hold
• More than 997.75 Sell
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Du- pont Analysis
3 Factor Analysis 2006 2007 2008 2009
Net profit margin(PAT/Sales) 0.078409149 0.109847714 0.07789259 0.093339016
Assets turnover(Sales/ Assets) 1.012903187 0.831274858 0.859411844 0.799241898
Leverage(Assets/ Equity) 3.312643016 3.593995565 3.132717699 3.55333972
5 Factor Analysis 2006 2007 2008 2009
PBIT Efficiency(PBIT/Sales) 0.120963515 0.160025649 0.138222063 0.160958052
Assets turnover(Sales/Assets) 1.012903187 0.831274858 0.859411844 0.799241898
Interest Burden(PBIT/PBIT) 0.862271586 0.907861257 0.856295418 0.797090094
Tax Burden(PAT/PBT) 0.751741047 0.756104705 0.658104948 0.727516918
Leverage(Assets/Equity) 3.312643016 3.593995565 3.132717699 3.55333972
Return on Equity 0.2631 0.3282 0.2097 0.2651
ROE 0.0048
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Technical Analysis
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CLOSING PRICE GRAPH
Closing Price
2500
2000
1500
Series1
1000
500
0
1 11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 161 171 181
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OHLC GRAPH
2500
2000
1500 Series1
Series2
Series3
1000 Series4
500
0
1 27 53 79 105 131 157 183 209 235 261 287 313 339 365 391 417
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MOVING AVERAGE GRAPH
Moving Average Graph
2500
2000
closing price
1500 10 days moving average
50 days moving average
1000 100 days moving average
200 days moving average
500
0
1 17 33 49 65 81 97 113 129 145 161 177 193 209
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EXPONENTIAL MA GRAPH
Exponential Moving Average Graph
2500
2000
1500
closing price
50 days moving average
exponential moving average
1000
500
0
1 28 55 82 109 136 163 190 217 244 271 298 325 352
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RSI
1
Stochastic Oscillator
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