Fighting coronavirus: L&T donates Rs 150 cr, TVS Motor 25 cr to PM-CARES

Engineering and construction giant Larsen & Toubro (L&T) on Monday announced Rs 150 crore donation to the PM-CARES Fund to fight the coronavirus outbreak and said it has set aside over Rs 500 crore per month to support about 1.60 lakh contract workers.

L&T joins a list of other corporates including Tata Group and Reliance Industries who have come forward to offer their support to fight this unprecedented crisis.

The company said it has set aside an outlay of over Rs 500 crore per month to support about 1.60 lakh contract workers by continuing to pay their wages during the ongoing lockdown and providing them with food and basic amenities at labour camps, while maintaining the COVID-19 prevention and containment protocol.

"Responding to the call given by Prime Minister of India, the company will donate Rs 150 crore to the PM-CARES Fund," the company said in a statement.

The diversified conglomerate said it is committed to participate in corporate India's response to COVID-19 through funds, community welfare plans and through leveraging its expertise to offer assistance.

"We are helping India's fight against COVID-19 by way of immediate funding, and through a range of welfare initiatives including converting our training schools into Isolation Centers," Larsen & Toubro Group Chairman AM Naik said.

TVS Motor pledges Rs 25 cr donation

TVS Motor Company on Monday said it will donate Rs 25 crore to the PM's Relief Fund (PM-CARES) for battle against COVID-19 pandemic.

The company is contributing on behalf of various group firms like TVS Credit Services Ltd, Sundaram-Clayton Ltd and others, it said.

This is in line with the company's continuous endeavour to ensure prosperous and sustainable communities, TVS Motor Company said in a statement.

The contribution is in addition to the ongoing activities being already undertaken through Srinivasan Services Trust (SST), the CSR arm of the group, it added.

"The COVID-19 pandemic marks an unprecedented time in modern history and it will require the best of humanity to overcome the battle.We applaud the Govt's strong resolve and numerous actions to fight this. Now, more than ever, it requires all of us to co-operate and support each other as a nation,'' TVS Motor Company Chairman Venu Srinivasan said.

SST is implementing various measures ranging from manufacturing and supplying supportive equipment, such as masks, to provide cooked meals to healthcare workers and police officers.

L&T, IIT Kanpur collaborate for research in industrial cyber security

The Indian Institute of Technology, Kanpur (IIT-K) and L&T Technology Services (LTTS) have collaborated to carry out joint research in industrial and infrastructure cyber security.

A multi-year memorandum of understanding (MoU) has been signed by LTTS CEO and managing director Keshab Panda and IIT Kanpur deputy director Prof Manindra Agarwal in Kanpur to this effect.

They will jointly set up a Center of Excellence (CoE) at the IIT Kanpur campus and conduct research in the areas of Honeypot (network-attached system set up to entrap cyber attacks and study hacking attempts), intrusion detection systems, malware analysis, blockchain, vulnerability assessment and penetration testing and provide cybersecurity awareness and training programs.

The pact also gives LTTS access to IIT Kanpur’s cutting-edge testbed for critical infrastructure.

The CoE will be a part of IIT Kanpur’s C3i Center, a central government funded one-of-a-kind cybersecurity research centre, which was developed to work on solutions and technologies to protect India’s strategic and critical utility infrastructure.

“LTTS is a leader in end-to-end cybersecurity solutions with assets spread over several domains which cater to a global clientele. Our expertise across security analysis, vulnerability assessments, design security architecture and security requirements has been strengthened by our partnership with many of the world’s prestigious educational institutions. LTTS’ partnership with IIT-Kanpur opens a new chapter in defense and industrial cybersecurity and pave the way for the creation of safe, secure and smart solutions for India’s industrial sector,” Panda said.

“Cyber attacks across the globe have affected millions of systems over the past few years leading to operational downtime, logistic failures, and production cycle disruption. LTTS’ deep-rooted and proven technological expertise combined with the cyber security research expertise of C3i Center will help counter such cyber attacks,” head of IIT Kanpur computer and science & engineering department Sandeep K Shukla said.

He said LTTS boasted of a well-rounded portfolio comprising automotive cybersecurity consulting, threat modeling, continuous threat monitoring & security updates patching among others.

“C3i has been in the forefront of vulnerability assessment and penetration testing with more than 8 CVEs published, building and utilising industrial scale cyber security test-bed for OT, Honeypots, malware analysis and intrusion detection research. This partnership will strengthen the security ecosystem in India. The company’s pool of experienced architects and engineers along with IIT’s research talent will have the capability to change the current cybersecurity landscape,” Shukla noted.

LTTS is a listed subsidiary of Larsen & Toubro Limited focused on engineering and R&D (ER&D) services. It offers consultancy, design, development and testing services across the product and process development life cycle. LTTS customers include 69 Fortune 500 companies and 51 of the world’s top ER&D companies, across industrial products, medical devices, transportation, telecom & hi-tech, and the process industries. Headquartered in India, it operates 17 global design centers and 50 innovation labs.

Larsen & Toubro trades lower for fourth straight day, hits new 52-week low

Shares of Larsen & Toubro (L&T) were trading lower for the fourth straight day, slipping 1.3 per cent on Tuesday to hit 52-week low of Rs 1,244 on the BSE. The construction & engineering company's stock was trading at its lowest level since February 18, 2019.

In the last nine months, L&T has underperformed the market by falling 22 per cent, as compared to 2 per cent rise in the benchmark S&P BSE Sensex during the period.

L&T’s October-December quarter (Q3FY20) results were below consensus estimates due to a 5 per cent decline in the infrastructure segment revenues on account execution hurdles such as ban on construction activity in national capital region (NCR) and political headwinds in Maharashtra, among others.

Meanwhile, the S&P BSE Capital Goods index hit an intra-day low of 16,281 and was trading close to its 52-week low level of 16,225, touched on August 23, 2019 in intra-day deal.

According to analysts at Emkay Global Financial Services, most companies in engineering and capital goods (ECG) universe highlighted deteriorating macroeconomic trends and strained government finances, affecting order outlook, execution challenges and working capital stress emanating from a tightened liquidity situation.

“Despite the declining growth visibility and rising challenges on working capital, we have not seen the stocks correcting much in the sector. We believe that continued order inflows and execution disappointment will result in a de-rating of stocks in the sector, and accordingly, we keep our bearish stance on the sector”, the brokerage firm said in capital goods sector report.

L&T Infotech board evaluates CEO and MD Sanjay Jalona's extension

L&T Infotech's CEO & MD Sanjay Jalona is likely to get another term to lead the IT services firm after his tenure is comes to an end in August. Sources said board of the firm is weighing an extension proposal.

L&T MBDA Missile System sets up integration facility in Tamil Nadu

L&T MBDA Missile Systems (LTMMSL) has set up a missile (inert) integration facility at Coimbatore. LTMMSL is a joint venture between engineering and construction major L&T and the European defence company MBDA. L&T owns 51% stake in LTMMSL while MBDA has 49%.

The inert facility spreads across an area of 16,000 sq. meters in a Special Economic Zone and will carter to domestic and global markets. The company has set up the assembly line for inert integration (without explosives), testing the Missile Subsystems and weapon launch systems.

Part of the Tamil Nadu Defence Industrial Corridor, the investment in the facility is yet to be disclosed.

LTMMSL has received a few orders and delivery of sophisticated weapon systems using state of the art test equipment is set to begin from this year itself, the company said in a release.

J D Patil, Chairman L&T MBDA Missile Systems, said: "L&T MBDA Missile Systems has been working proactively to offer advanced missiles and missile systems to the Indian Armed Forces through domestic production. The creation of this new integration facility at Coimbatore is a first step in this direction. We are showcasing some of these next-gen offerings at the DEFEXP020 to be held at Lucknow."

“With the technical and human capabilities offered by this site, India will be ideally placed to offer its armed forces and the export market the very latest generation of defence equipment technology," said Pasquale Di Bartolomeo, Vice Chairman and Member of the Board L&T MBDA Missile Systems.

Engineering firms flock to data centre biz, see opportunities worth $2.7 bn

A steady stream of traditional engineering companies is building and maintain data centres, a business projected to grow 8.5 per cent annually.

“Data centres are extremely high on engineering,” said Prasanna Sarambale, chief executive officer for data centre business and group head for business development at Sterling and Wilson. Sarambale expects the business, by the end of this financial year, will clock a turnover of Rs 400 crore annually.

Larsen & Toubro (L&T) and KEC International are two other companies looking at this business. L&T is already executing multiple projects, and KEC International hopes to bag its maiden project soon.

“We are the lowest bidder in a data centre project,” said Vimal Kejriwal, managing director and chief executive officer for KEC International. His company believes data centres are right up its street, as it specialises in civil engineering, cables and smart cities segment.
“It also brings business to our transmission and distribution (T&D) business, as data centres are power intensive,” said Kejriwal.

“The opportunity in building these centres may be around Rs 4000 crore per annum, while it may be Rs1000 crore for the related infrastructure like DG sets. It is a good opportunity for contractual work for building them. The capital goods opportunity, in terms of hardware requirements, is limited for Indian companies, as most of the parts are imported,” said an analyst with a domestic brokerage firm who did not wish to be identified.

Industry data suggests engineering opportunities worth $2.7 billion in data centres and the number is expected to become $ 4 billion by 2024. “We are seeing more competition entering this segment…this is an industry that is flourishing,” said Sarambale.

Capital goods companies an annual turnover of Rs 200 crore from data centres.

Typical of engineering companies, data centres are being targeted for two kinds of opportunities: construction and maintenance. “We have built data centres and handed them over. There are some which are with us on a build operate and maintain basis,” said a person from a major engineering company who did not wish to be identified.

Some others, like ABB India, have spotted potential in servicing these data centres. “Many more global co-location companies are investing and expanding their Indian Business. It is one of the emerging drivers of growth for ABB in India and in the past three years we have witnessed significant traction in the data centers segment,” said CP Vyas, President, Electrification business, ABB India. ABB offers a range of products and solutions to contribute to power availability, reliability and low carbon emissions for data centers.

The ABB executive expects Internet of Things (IOT), artificial intelligence and cloud computing complimented by e-governance, 5G rollout initiatives by the Indian government will create more opportunities. The government’s smart cities initiative is already contributing to the data centres related order-book for various engineering companies. State-sponsored welfare schemes are also expected to contribute to higher demand for centralized data centres.

For companies like Sterling& Wilson alone, order book for data centres stands at Rs 800 crore to Rs 900 crore. The company is also tapping international markets, which contributed 15 to 20 per cent to the segment turnover.

L&T profit before tax for Q3FY20 dips 5%, firm misses street estimates

Engineering conglomerate Larsen & Toubro (L&T) reported a 5 per cent decline in profit before tax (PBT) for the December 2019 ended quarter on account of lower disbursals and profits for its financial services arm.

Post tax, the company reported a consolidated profit of Rs 2,353 crore, a jump of 15 per cent. While infrastructure segment revenue for the company took a hit, overall order inflow grew at a slower pace of 2 per cent. However, the management maintained its order and revenue guidance for the full year.

For the quarter which ended on December 2019, L&T PBT was at Rs 3,223.23 crore, compared to Rs 3,401.22 crore reported durig corresponding period a year ago. Consolidated gross revenue for the same period was at Rs 36,243 crore, a growth of 6 per cent year-on-year. The company missed streets estimates. In a Bloomberg poll, 17 analysts estimated revenue at Rs 39368 crore and 11 analysts estimated net profit at Rs 2,404 crore.

“It has been a challenging quarter and nine month period. It is well known, well commented and well accepted now that economic growth has slowed down. However, there are opportunities, some have been deferred, we see these are opportunities deferred and not opportunities lost,” said Shankar Raman, whole time director and chief financial officer (CFO) for L&T. He added, economic reforms in the country are now moving from the back burner to the front burner.

Raman added, “The government needs to deal with some structural issues, within a year or year and half the cycle should reverse.” Total order inflow for the company grew at 2 per cent to Rs 41,579 crore, largely helped by growth in international orders. The company’s outstanding order book was at Rs 3.06 trillion as of December 2019. The company maintained its full year guidance of 10 to 12 percent growth in order inflow for the full year.

On the upcoming budget, company officials added, the budget will act as an enabler but not a game changer for the next 12 months. The National infrastructure Pipeline (NIP) plans Rs 102 trillion investment in the next five years. Company officials added they will look for financing details for the planned NIP.

Segment wise, L&T’s infrastructure business revenue witness a decline of 5 per cent. In terms of orders, company officials said there are concerned on the pre determined budget of projects and lack of competition. SN Subrahmanyan, managing director and chief executive officer for the company said, there are order where L&T is the single bidder and needs to bid multiple times, to win the award. In certain other orders, he added, L&T’s bid has been higher than what the government has budgeted for the projects.

L&T Tech bags engineering, procurement project worth millions in Europe

L&T Technology Services on Monday said it has bagged a multi-million-dollar engineering, procurement and construction management project in Europe.

"L&T Technology Services Ltd (LTTS)...won a multi-million dollar project from one of the world's top plastics, chemicals and refining manufacturers, to deliver the entire spectrum of engineering, procurement and construction management (EPCM) services for the expansion of an existing site in Europe," the company said in a filing to BSE.

The expansion project will be implemented at the customer's brownfield plant in Germany over 30 months.

As the strategic engineering partner, LTTS will execute the entire project through an EPCM model, from procurement and supply chain management support to safety aspects and efficient design.

"LTTS has already carried out successful brownfield projects in the USA and we are privileged to extend our engagement with an important customer to the European markets," Amit Chadha, President, Sales and Business Development and board member at L&T Technology Services said.

The shares of L&T Technology Services were trading at Rs 1,474.60 a piece on BSE in morning trade.

L&T Finance Holdings to cut structured finance book to Rs 5,000 crore

L&T Finance Holdings plans to scale down its portfolio of structured Finance and debt capital market book to around Rs 5,000 crore by March 2020 from Rs 7,400 crore now, as part of plans to exit these segments. This is part of defocused book.

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In May, the company had announced plans to exit these areas.

L&T Construction bags Rs 5,000-7,000-cr Navi Mumbai residential project

Infrastructure company Larsen & Toubro (L&T) on Monday said its construction arm has bagged contract from the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) to construct 23,432 dwelling units at various locations in Navi Mumbai.

The company did not provide the value of the contract, but said the order falls under the 'major' category, which ranges between Rs 5,000 crore and Rs 7,000 crore according to the classification of contracts. 

"The Buildings & Factories business of L&T Construction has secured a prestigious residential project from the City and Industrial Development Corporation of Maharashtra Limited (CIDCO) to construct 23,432 dwelling units with on-site infrastructure works at various locations in Navi Mumbai," L&T said in a regulatory filing.

L&T said the project, being part of the Pradhan Mantri Awas Yojana (PMAY), envisages construction of Economically Weaker Section (EWS) and Low-Income Group (LIG) type of dwelling units. 

The building configurations vary from 13 to 20 storeys. This is a fast track project to be completed within stringent timelines, the company added.

Shares of L&T were trading 1.25 per cent higher at Rs 1,345 apiece on BSE. 

L&T's power business bags major orders for 3 Damodar Valley Corp plants

Infrastructure company Larsen & Toubro Friday said its power business has bagged "significant" orders from Damodar Valley Corporation (DVC) to set up flue gas desulphurisation (FGD) systems in three of its power plants.

DVC's three plants where FGD systems will be set up are Durgapur Steel Thermal Power Station (2x500 MW), Mejia Thermal Power Station (2x500 MW) and Raghunathpur Thermal Power Station (2x600 MW) - in West Bengal, Larsen & Toubro (L&T) said in a regulatory filing.

The company did not provide value of the engineering, procurement and construction (EPC) contracts, but said the orders fall under "significant" category which ranges between Rs 1,000 crore and Rs 2,500 crore as per its classification of contracts.

L&T said India's power ministry has set December 2022 as the deadline for existing thermal power plants to comply with revised emission norms.

Installation of FGD systems in existing and upcoming thermal power plants has been made mandatory by Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India, to curtail sulfur dioxide (SO2) emissions, it added.

Shares of L&T were trading 0.43 per cent lower at Rs 1,427.45 apiece on BSE.

Remuneration for L&T's top three officials up 45-100% in FY19: Report

The total remuneration paid to L&T group Chairman A M Naik doubled in FY19, according to the firm’s latest annual report. Remuneration for the company’s CEO and MD S N Subrahmanyan rose 52.36 per cent. In addition, L&T’s whole-time director and Chief Financial Officer R Shankar Raman saw remuneration rise 45.59 per cent.

According to the company’s annual disclosure, average percentage increase made in the salaries of employees other than the managerial personnel for the year 2018-19 was 5.45%.

L&T power business bags Rs 7,000-cr order from SJVN Thermal in Bihar

Infrastructure major Larsen & Toubro (L&T) on onday said its power business has won a mega order from SJVN Thermal Pvt Ltd to set up an ultra-supercritical power plant in Buxar district, Bihar.

The engineering and construction company, did not provide the exact value of the contract, but specified that as per its classification, the mega project is over Rs 7,000 crore.

"The scope of work for L&T includes design, engineering, manufacture, procurement, supply, construction, erection, testing and commissioning of Buxar Thermal Power Project (2x660 MW).

SJVN Thermal Pvt Ltd is a wholly-owned subsidiary of SJVN Ltd, a joint venture of the Government of India and the Government of Himachal Pradesh and a Mini Ratna public sector undertaking.

Prime Minister Narendra Modi laid the foundation stone of the plant in March this year.

Shares of the company were trading at Rs 1,545.40 apiece, up 0.35 per cent from their previous close, on BSE.

L&T set to construct Navi Mumbai airport, likely to finish by mid-2020

Larsen & Toubro (L&T), a leading player in the airport construction segment, is set to win contract to build the Navi Mumbai International Airport. The board of City and Industrial Development Corporation (CIDCO), the planning authority, met on Friday to consider the contract.

A tender to select the engineering procurement and construction (EPC) contractor was floated last August. A source said L&T has been chosen for the construction work. The contract size is not known and the award will take place following government approvals, it is learnt. “We are yet to award the EPC contract and will share an update in due course,” said a spokesperson of GVK, which is developing the Navi Mumbai airport. A CIDCO spokesperson did not respond to an email query.

An L&T spokesperson confirmed its participation in the bid but did not elaborate. L&T is the project contractor for ongoing expansion works at Bengaluru, Delhi, and Hyderabad airports.

Navi Mumbai airport has been plagued by delays and cost escalation over issues related to land acquisition and environment issues. The airport was being planned to handle 10 million passengers in the phase one, but the terminal will now be built to handle 20 million.

The first phase project cost is pegged at over ~14,000 crore and is being funded through equity investment and ~10,300-crore long-term debt. While the state hopes the airport will be ready by mid-2020, CRISIL in its report in May-end had said operations are expected to start in 2023.

Site complexity is another challenge. One of the first tasks of the contractor will be to raise the ground level to 8.5 metres and laying utilities. These would need to be carried out before the construction of runway and other infrastructure. The contract scope covers cut and fill works, construction of terminal, airfield works, including runway, apron, ancillary buildings, multi-level car park, GVK had said in its bid notice last August.

Pre-development work for the project began in June 2017. This included flattening a hillock, reclaiming marsh land and diverting a river. CIDCO, which has been carrying out this work, has increased the land level to 5.5 metres.

The Ulwe river has been diverted outside the airport boundary and the channel widened to 60 metres.

A source said the river diversion work would be completed in a week’s time, while the work of laying underground power cables is expected to be completed by December-end.

More than 85 per cent of project-affected villagers have been shifted and the rest are expected to vacate by June end. Ten villages have been impacted by the project and number of impacted families is around 2,600. CIDCO has offered plots to those whose houses and land have been acquired for the project. Those who lost their land have been given 22.5 per cent developed plots as compensation in vicinity of the airport.

L&T makes Rs 5,030-crore open offer for additional 31% stake in Mindtree

Engineering major Larsen & Toubro (L&T) on Friday announced an open offer to purchase 51.3 million shares or an additional 31 per cent stake in Mindtree at Rs 980 apiece. At the current offer price, L&T has to shell out around Rs 5,029.8 crore to buy the stake.

In an exchange filing, the company said the open offer will start on June 17 and will end on June 28. “L&T makes a cash offer of Rs 980 per fully paid up equity share of the face value of Rs 10 each, to acquire up to 51.3 million equity shares representing 31 per cent of the voting share capital...to the shareholders of Mindtree,” said the letter of offer. Axis Capital and Citi will act managers to the open offer.

L&T had to face delay in launching the open offer, pending approval from market regulator Sebi, which it received late last week. After the announcement of the offer, the committee of independent directors (IDC) set up by Mindtree is likely to come up with its reasoned recommendations on the offer to shareholders.

The board of the Bengaluru-headquartered IT services firm had, on March 26, formed the IDC as part of a regulatory requirement to provide its reasoned recommendation on the offer. The committee is headed by Apurva Purohit with Milind Sarwate, Akshaya Bhargava, and Bijou Kurien being the other three members of the panel.

Sources in the know said the panel of independent directors was likely to come up with the recommendations next week. L&T can revise the open offer price until the last working day before the tendering process begins.

After concluding the purchase of 20 per cent stake from Coffee Day Founder V G Siddhartha, L&T has already purchased an additional 8.90 per cent stake in Mindtree through open market transaction. It plans to acquire 15 per cent stake through the open market purchase route. L&T is pursuing a controlling stake of 66 per cent in the mid-tier IT firm for around Rs 10,700 crore. However, the unsolicited takeover attempt is being opposed by Mindtree’s founders, who seek more clarity on L&T’s plan.

L&T nears 26% threshold in Mindtree after open-market transaction

L&T is fast inching towards touching the 26 per cent shareholding threshold in Mindtree, as the engineering firm on Wednesday bought an additional 2.29 per cent stake worth Rs 368.4 crore through open market transaction. With this round of buying, total holding of L&T reached 23.92 per cent in the Bengaluru-headquartered IT services company.

This is the third consecutive day of buying by L&T from the open market as the company added 0.89 per cent stake of Mindtree on Tuesday for around Rs 144 crore. On Monday, the firm bought 0.75 per cent stake in the mid-tier IT firm for around Rs 113 crore.

According to the bulk deal data available with the NSE, L&T on Wednesday bought over 3.75 million shares, which is 2.29 per cent of Mindtree’s total share base, at an average price of Rs 979.96 per share.

The data showed Rekha N Shah, wife of ace investor and Enam co-founder Nemish Shah, was one of the principal sellers, who sold over 2.68 million shares at an average price of Rs 980. Reaching the threshold level of 26 per cent is critical for L&T as it is likely to ensure the firm a board seat in Mindtree because of its voting share apart from triggering the open offer.

Meanwhile, there are reports suggesting that L&T might not revise its open offer price of Rs 980 for Mindtree shareholders.

According to the Securities and Exchange Board of India (Sebi) norms, the company can revise its open offer price one working day prior to tendering of shares begin. The share price of Mindtree was marginally up to close at Rs 980.10 on Wednesday in the BSE.

Amid a takeover bid, L&T had concluded the purchase of 20 per cent stake of Coffee Day founder in the Bengaluru-headquartered IT services firm for about Rs 3,210 crore last week. The company is currently in the process of buying an additional 15 per cent stake from the open market and this week’s bulk deals are part of this process.

L&T is pursuing a controlling stake of 66 per cent in the mid-tier IT firm for around Rs 10,700 crore. However, the unsolicited takeover attempt is being opposed by Mindtree’s founders, who are seeking more clarity on L&T’s plan.

Mindtree’s panel of independent directors is in the process of evaluating L&T’s open offer proposal and will give its recommendations by May 10. The open offer will begin on May 14 and close on May 27.

L&T buys shares of Mindtree worth Rs 144 crore through open market

Construction major L&T on Tuesday bought shares worth about Rs 143.70 crore of Mindtree through open market transactions.

According to the bulk deal data available with the NSE, the firm bought over 1.46 million shares, which is 0.89 per cent of Mindtree's share base, at an average price of Rs 979.93 a share. L&T on Monday purchased over 1.15 million shares worth around Rs 113 crore of Mindtree thorough the similar route. After these transactions, the current holding of L&T in Mindtree stands at 21.63 per cent.

Amid a takeover bid, L&T had concluded the purchase of 20 per cent stake of Coffee Day founder in the Bengaluru-headquartered IT services firm for about Rs 3,210 crore last week.

The company is currently in the process of buying an additional 15 per cent stake from the open market and Monday's bulk deal is part of this initiative.

L&T is pursuing a controlling stake of 66 per cent in the mid-tier IT firm for around Rs 10,700 crore. However, the unsolicited takeover attempt is being opposed by Mindtree's founders, who are seeking more clarity on L&T's plan.

Mindtree's panel of independent directors is in the process of evaluating L&T's open offer proposal and will give its recommendations by May 10. The open offer will begin on May 14 and close on May 27.

Larsen & Toubro nears 52-week high after Mindtree stake buy; stock up 3%

Shares of Larsen & Toubro (L&T) rose 3 per cent to Rs 1,415 in intra-day trade on Friday, extending their Wednesday gain on the BSE, even as brokerages firm maintain ‘buy’ rating on the stock after the company proposed to acquire IT firm Mindtree.

The stock is 3 per cent away from its 52-week high price of Rs 1,459 that it hit on December 21, 2018, in intra-day trade. It touched an all-time high of Rs 1,470 on February 1, 2018, on the BSE.

At 10:29 am, L&T was the top gainer among benchmark indices S&P BSE Sensex and Nifty 50.

L&T has signed a binding agreement to acquire 20.32 per cent of Mindtree shares at a price of Rs 980 per share from a long-term investor. The firm now plans to up its stake in Mindtree to 66.32 per cent for a total outlay of Rs 10,730 crore through open offer and open market purchases.

The engineering conglomerate said the objects of Mindtree acquisition was to grow the company's revenue and profit of the asset-light services business portfolio as well as the consolidated group performance, thereby increasing the consolidated return on equity and further diversify the consolidated group revenue and profits into the information technology and technology services areas and accordingly acquire a controlling stake in Mindtree.

The acquisition is expected to be value accreting for both the company's shareholders and the Mindtree's shareholders in the medium-to-long term, L&T said.

Given its cash balance of Rs 16,000 crore (as of Dec’18), this deal can be comfortably concluded without any debt. L&T views the potential acquisition as value accretive, as it can now deploy its cash in a business which can potentially grow much faster than treasury returns, analysts at JM Financial said in company update. The brokerage firm has ‘buy’ rating on the stock with a target price (TP) of Rs 1,700 per share.

Analysts at JP Morgan have ‘overweight’ rating on L&T with December 2019 target price of Rs 1,635.

“We subscribe to L&T’s viewpoint on synergies from the transaction in the medium/long term though integration risks appear high near term, given robust opposition to the takeover by Mindtree’s promoter management and risk of attrition of key Mindtree employees”, the brokerage firm said in a report, dated March 19, 2019.

“L&T may have aimed this acquisition as an alternative to vend off regulatory hurdles faced in other options (buyback) to utilise and earn higher cash yield compared to holding cash on the balance sheet. This move could be RoE neutral in the short-term and is likely to be value accretive in the medium to long term. L&T has consistently been delivering in terms of bagging orders, strong execution of backlog and at the same time improving the quality of its balance sheet thereby generating reasonable cash flows,” analysts at ICICI Securities said in event update with ‘buy’ rating on the stock and target price of Rs 1,655 per share.