 "Larsen and Toubro")
The market capitalisation of Larsen & Tobro (L&T) hit the Rs 4-trillion-mark for the first time on Thursday after its shares touched a record high of Rs 2,846.70, up 4.3 per cent on the BSE, in intraday trade. L&T's market cap touched Rs 4.001 trillion in intra-day deal today. At 03:00 PM, the company's market cap stood at Rs 3.99 trillion, as per data provided by the BSE.
Meanwhile, L&T has fixed September 12, 2023, as the record date for the purpose of determining the entitlement and the names of equity shareholders who would be eligible to participate in the buyback.
The Board of L&T, at its meeting held on July 25, 2023, had approved the buyback of 33.33 million equity shares at a maximum price of up to Rs 3,000 for an aggregate consideration of up to Rs 10,000 crore on a proportionate basis, through the tender offer route.
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In financial year 2021·2022, the L&T formulated its Lakshya'26 Strategic Plan, one of the key strategic objectives of which was to improve return on equity and maximize shareholder value.
Increased profitability, release of working capital higher dividends apart, return of extra capital to shareholders in the form of buyback of shares of the company is one such initiative which can help in meeting these objectives, L&T had said as the objective of the buyback.
The company is currently following an asset-light business model, and hence a significant investment, which may utilise surplus cash, is not envisaged. Hence, it is proposed to undertake a buyback to increase shareholder value in the longer term and improve return on equity.
Since the announcement of buyback plan on July 20, L&T has outperformed the market by surging 14 per cent from a level of Rs 2,489.60. In comparison, the S&P BSE Sensex has slipped 2.5 per cent during the same period. L&T had also paid total dividend of Rs 30 per share, including a special dividend of Rs 6 per share, for the financial year 2023-24 in August.
Meanwhile, the consolidated order book of the L&T group is at Rs 4.13 trillion as on June 30, 2023, with international orders having a share of 29 per cent.
The company received orders worth Rs 65,520 crore at the Group level during the quarter ended June 30, 2023, registering a strong year0on0year growth of 57 per cent. During the quarter, orders were received across diverse segments like Rail, Renewables, Rural Water Supply, Transmission & Distribution, IT & Office Space and Onshore & Offshore verticals of the Hydrocarbon business. International orders at Rs 27,646 crore during the quarter comprised 42 per cent of the total order inflow.
Separately, reports suggest L&T has bagged its biggest-ever order worth Rs 25,000 crore from Aramco. The company is yet to comment on the report.
Nonetheless, analysts expect the order book and inflows to improve as the company has strong order prospects in the pipeline and is keen to utilise the opportunities to sustain its growth momentum. The company’s growing order inflows and order prospects pipeline will support performance in the future. Strong revenue, focus on cash generation, and sound capital allocation are expected to aid the company’s profitability, analysts said.
