Larsen & Toubro, its three affiliates and three other entities on Thursday picked up an 8.03 per cent stake in Cube Highways Trust for Rs 1,243 crore through open market transactions. The sellers involved in the transaction, include Cube Highways and Infrastructure I-D Pte, Cube Highways and Infrastructure Pte and Cube Mobility Investments through separate bulk deals on the BSE.

Engineering and construction major Larsen & Toubro (L&T) has acquired 12.5 million equity shares, representing a 12.25 per cent stake, in the Indian Foundation for Quality Management (IFQM), the company said in an exchange filing on Friday. The acquisition, worth Rs 12.5 crore, aligns with L&T’s broader mission to elevate the global perception of ‘Brand India’ by enhancing product and service quality across various sectors.

In its filing, L&T said that the shares were allotted on Thursday. The company added that this move strengthened L&T’s commitment to fostering a culture of excellence and global standards within the Indian industry.

The company’s management has maintained its guidance for FY25, expecting a 15 per cent increase in revenue and a 10 per cent rise in order inflow, with core margins projected at 8.25 per cent.

Analysis :

Larsen & Toubro (L&T) is one of India’s largest and most diversified engineering, construction, and infrastructure companies. L&T has a robust order book, especially in infrastructure, energy, and heavy engineering sectors. The company continues to secure large-scale projects, both domestically and internationally, across various sectors like transportation, roads, railways, power, and water management. Timely Execution: L&T is known for its strong project execution capabilities, which help the company maintain profitability despite cost pressures and inflation.

• PE ratio: – Price to Earnings’ ratio, which indicates for every rupee of earnings how much an investor is willing to pay for a share. A general rule of thumb is that shares trading at a low P/E are undervalued (it depends on other factors too). Larsen & Toubro has a PE ratio of 43which is high and comparatively overvalued .
• Return on Assets (ROA): – Return on Assets measures how effectively a company can earn a return on its investment in assets. In other words, ROA shows how efficiently a company can convert the money used to purchase assets into net income or profits. Larsen & Toubro has ROA of 40% which is a bad sign for future performance. (higher values are always desirable)
• Current ratio: – The current ratio measures a company’s ability to pay its short-term liabilities with its short-term assets. A higher current ratio is desirable so that the company could be stable to unexpected bumps in business and economy. Larsen & Toubro has a Current ratio of 26.
• Return on equity: – ROE measures the ability of a firm to generate profits from its shareholders investments in the company. In other words, the return on equity ratio shows how much profit each rupee of common stockholders’ equity generates. Larsen & Toubro has a ROE of 71% .(higher is better)
• Debt to equity ratio: – It is a good metric to check out the capital structure along with its performance. Larsen & Toubro has a D/E ratio of 35which means that the company has low proportion of debt in its capital.
• Inventory turnover ratio: – Inventory Turnover ratio is an activity ratio and is a tool to evaluate the liquidity of a company’s inventory. It measures how many times a company has sold and replaced its inventory during a certain period of time. Larsen & Toubro has an Inventory turnover ratio of 33which shows that the management is efficient in relation to its Inventory and working capital management.
• Sales growth: – Larsen & Toubro has reported revenue growth of 24% which is poor in relation to its growth and performance.
• Operating Margin: – This will tell you about the operational efficiency of the company. The operating margin of Larsen & Toubro for the current financial year is 24%.
• Dividend Yield: – It tells us how much dividend we will receive in relation to the price of the stock. The current year dividend for Larsen & Toubro is Rs 34and the yield is 92 %.

After a pin bar candle in the opening range, the stock had good potential to rise today and hence recommended ATM Call Option.