L&T announces Rs 9,000-crore share buyback, stock closes higher

Shares in the firm rose nearly 3 per cent today, after the announcement of share buyback. The stock closed 2.30% or 30 points higher at 1,352.50 level on the BSE. It has gained 7.60% since the beginning of this year.  During the last one year, the stock has clocked 20.29% gains.

By BusinessToday.In  
Thursday, August 23, 2018

Construction and engineering firm L&T approved a share buyback worth up to Rs 9,000 crore at its board meeting held in Mumbai today. The company will buy back 6 crore shares at a price of up to Rs 1,500 per share. These 6 crore shares amount to 4.29% of the total paid up equity share capital of the firm.  The buyback price is at over 13 per cent premium to Tuesday's closing price of  Rs 1,322.15 per share. Larsen & Toubro said the share buyback is subject to approval of the members by means of a special resolution through a postal ballot. The process, timelines and other requisite details will be released in due course, it added.

Shares in the firm rose nearly 3 per cent today, after the announcement of share buyback. The stock closed 2.30% or 30 points higher at 1,352.50 level on the BSE. It has gained 7.60% since the beginning of this year.  During the last one year, the stock has clocked 20.29% gains.

The stock closed nearly 7 percent higher on Monday after the firm announced it would consider share buyback on August 23.

Credit Suisse said the firm has reasonably strong inflows, execution pick-up, steady profitability across segments and margin uptick.

It is exposed to lower Middle East-related risk and has strong cash flows along with divestitures.  The firm's valuations are attractive at 16 times FY20E consolidated EPC. The brokerage has fixed a target price of Rs 1,700 on the stock.

On August 20, Morgan Stanley said buyback is "over and above the regular dividend and is tax efficient from a shareholder perspective."

Morgan Stanley said, "This is L&T's first buyback, if approved by board, and could be taken by market as a signal of an alternative to reward shareholders." The brokerage has assigned 'overweight' rating to the stock with a price target of Rs 1,786.

Macquarie said the buyback boots L&T's return on equity/cash return credentials. The decision definitely drives short-term price action but also gives confidence in the outlook. The stock has been relative underperformer in the last 3 months.

30 of 36 brokerages rate the stock "buy" or 'outperform', four "hold", one "underperform" and one "sell", according to Reuters.

The conglomerate reported a 43.14 cent rise in consolidated net profit at Rs 1,472 crore for the first quarter ended June 30, 2018. The company had posted a net profit of Rs 1,028.3 crore in the corresponding period a year ago.

Its total income in the quarter under review increased by 17.12 per cent to Rs 28,527.48 crore, as against Rs 24,355.52 crore in the year-ago period, L&T said.

Larsen & Toubro is a Mumbai-based technology, engineering, construction, manufacturing and financial services company.

Written and edited by Aseem Thapliyal

Related Stories

This stock turned Rs 1 lakh into Rs 5 lakh in five years, do you own it?
This stock turned Rs 1 lakh into Rs 5 lakh in five years, do you own it?
Idea Cellular stock rises up to 6% on completion of merger with Vodafone India
Idea Cellular stock rises up to 6% on completion of merger with Vodafone India
Why YES Bank stock tanked over 6% today despite RBI nod to extension of Rana Kapoor as CEO
Why YES Bank stock tanked over 6% today despite RBI nod to extension of Rana Kapoor as CEO

Latest Stories

Qatar Airways to wait one year before deciding on India venture
Qatar Airways to wait one year before deciding on India venture
India to construct 100 airports at the cost of Rs 4.2 lakh crore
India to construct 100 airports at the cost of Rs 4.2 lakh crore
Travelling abroad? Falling rupee means everything will get expensive
Travelling abroad? Falling rupee means everything will get expensive
SPONSORED