L&T re-listed, closes Day One at Rs 635/shr

The stocks markets have valued the engineering and construction business of Larsen & Toubro (L&T) at Rs 635 a share, Rs 395 more than what the Birlas will receive when they sell their 14.95 per cent stake in L&T to the company's employees' trust.

According to the deal between the Birlas and L&T, finalised last year, the Birla group agreed to sell its holding of 14.95 per cent in L&T to L&T Employees Welfare Trust at Rs 240 a share.

The L&T scrip closed on Wednesday at Rs 635.35 on the Bombay Stock Exchange and Rs 635.95 on the National Stock Exchange on being re-listed after a gap of one month.

An industry analyst said: "The listing of L&T at around Rs 650 only shows that the company without its cement business was undervalued at Rs 240 a share."

However, Birla's notional loss will not translate into a gain for the L&T Trust. Although the trust derives a notional gain through this deal, it will not result in a tangible benefit to employees.

The employees, who contribute 3-4 per cent of their salaries into the trust, get a return of 5 per cent of the amount that they have contributed, along with the dividends on these shares, distributed equitably.

While L&T will lend around Rs 230 crore to its employees trust, around Rs 200 crore will be raised through debt and Rs 16 crore will be generated by the trust. The stock closed at Rs 635.35 on the BSE and Rs 635.95 on the NSE.

Around 54.62 lakh shares were traded on the two exchanges today. The BSE re-listing price of Rs 620 pegs the valuation of the company at around Rs 7,750 crore.

Trading in the shares was suspended on May 18 to give effect to the demerger of the company's cement division - UltraTech CemCo. Aditya Bilra group flagship - Grasim Industries - had struck a deal with L&T to acquire the cement business for an estimated Rs 2,100 crore.