INSUBCONTINENT EXCLUSIVE:
ET INTELLIGENCE GROUP: The stock of Larsen Toubro (LT) gained 6.7 per cent on Monday following the news of its first-ever share buyback
sale of assets and its intention to improve the return on equity (RoE).
The company raised nearly Rs 4,500 crore over the past eight
quarters by divesting assets including IPO proceeds from LT Infotech and LT Technology Services, sale of the general insurance unit and the
Its cash and equivalents rose to Rs 6,824 crore in FY18 compared with Rs 3,526 crore in the previous fiscal.
In the five-year vision plan,
the company has stated to pursue a light-asset approach
Given a few more assets such as Nabha Power Plant, InViTS for toll roads and stake sale in Hyderabad Metro on the block, analysts expect
more buyback offers from the company in the coming quarters
These assets together are worth over $2 billion (approximately Rs 14,000 crore).
According to the Companies Act, a company can buy back 10
company to limit the buyback amount to the current divestment kitty, which is around Rs 5,000 crore
This may increase the RoE by 85-90 basis points from 13.9 per cent in FY18
worth of Rs 5,000 crore, the acceptance ratio or the number of shares likely to be accepted for every 100 shares tendered will be 3.4 per
in LT, all shareholders are entitled to participate in the buyback
Mutual funds, foreign portfolio investors (FPIs) and insurance companies hold 15.4 per cent, 18.7 per cent and 21.7 per cent stakes,
respectively, in the company
cent discount to its five-year average valuation.
