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From Infrastructure to Innovation: Why L&T Shines

From Infrastructure to Innovation: Why L&T Shines
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L&T (Larsen & Toubro) is not just another company; it is often seen as a proxy for India’s infrastructure story because it is one of the largest and most diversified infrastructure companies in the country. It has a remarkable track record of executing large and complex projects across various sectors, including construction, engineering, manufacturing, and energy. 

Here’s why L&T is slowly becoming an investor favourite:

1. Impressive Order Book: As of September 2023, L&T boasts its highest-ever order book, valued at ₹4.5 trillion, with a whopping 72% year-on-year growth. This signifies a strong demand for their services, especially in the hydrocarbon segment, which is driving remarkable growth.

2. Competitive Advantage: L&T’s in-house design, engineering, and fabrication capabilities for critical equipment and systems give it a competitive edge. This self-reliance reduces costs and enhances efficiency.

3. Diversification Beyond Infrastructure: L&T isn’t limited to infrastructure alone. Through its subsidiary, it has ventured into IT services and solutions, offering a range of services such as data analytics, digital consulting, and cyber security. The merger of LTI and Mindtree has made L&T a significant player in the Indian IT sector.

4. Space and Defence Partnerships: L&T has been a trusted partner of ISRO for over five decades, contributing to India’s space missions. Its involvement in manufacturing critical equipment for space exploration is a testament to its technological prowess. L&T is also actively supporting India’s defence industry through partnerships with DRDO and the armed forces.

5. Forward-Looking Initiatives: L&T has embraced the digital age by launching digital platforms like L&T SuFin and L&T EduTech. These initiatives are poised to benefit from the global digitalization trend. Additionally, the company’s foray into designing semiconductor chips is well-timed to address the chip shortage issue.

6. Strong Financial Performance: L&T’s financials are impressive. In the last three years, it achieved a compound annual growth rate (CAGR) of 10% in revenue and 39.3% in net profit. The return on equity (RoE) and return on capital employed (RoCE) have shown substantial improvements.

7. Consistent Stock Growth: Over the past three decades, L&T shares have grown at a CAGR of 26.4%, outperforming the BSE Sensex benchmark index. This consistency in stock growth reflects the company’s stability and potential for investors.

In summary, L&T can be a good pick due to its robust presence in India’s infrastructure sector, diverse revenue streams, strategic technological partnerships, and a history of impressive financial performance. Moreover, the company’s forward-looking initiatives make it well-positioned to benefit from emerging trends. While investing always carries some degree of risk, L&T’s track record and strategic positioning make it a compelling option for long-term investors looking for steady growth in their portfolios.

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Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The content in these posts/articles is for informational and educational purposes only and should not be construed as professional financial advice and nor to be construed as an offer to buy/sell or the solicitation of an offer to buy/sell any security or financial products. Users must make their own investment decisions based on their specific investment objective and financial position and use such independent advisors as they believe necessary.

WEEKENDINVESTING ANALYTICS PRIVATE LIMITED is a SEBI registered (SEBI Registration No. INH100008717) Research Analyst

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From Infrastructure to Innovation: Why L&T Shines
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