L&T Sets September 12 Record Date for ₹10,000 Crore Share Buyback

Engineering and infrastructure conglomerate Larsen & Toubro Ltd. (L&T) has announced September 12 as the record date for its historic ₹10,000 crore share buyback. The announcement of the share buyback has ignited investor enthusiasm, propelling L&T's stock price by an impressive 9 percent to a record high of ₹2,758. Early trading session on Monday the stock was up 1.5% trading at ₹2678.85.

Buyback Details

L&T's buyback entails acquiring 3.33 crore shares, each with a face value of ₹2, at a total cost of ₹10,000 crore. This move marks a momentous occasion, being the company's inaugural share buyback initiative. The buyback will be executed through the tender offer route, setting the maximum share price at ₹3,000. This price stands at a premium of 13.66% over the closing price of the stock on the preceding Friday. This buyback constitutes approximately 2.4% of the total equity.
This step follows L&T's prior attempt in August 2018, when its board approved a groundbreaking buyback after 80 years. This earlier effort aimed at 4.29% of paid-up equity capital, roughly ₹9,000 crore. However, the proposal faced regulatory hurdles due to concerns about the post-buyback debt-equity ratio, leading to its rejection by the capital markets regulator, Sebi.

Financial Performance and Market Response

L&T's financial performance is on an upward trajectory, with a noteworthy 46% year-on-year increase in net profit, reaching ₹2,493 crore. Additionally, consolidated revenue for the quarter totaled ₹47,882 crore, marking a 34% surge compared to the same period in the previous year (₹35,853 crore).

The market's reaction has been positive, with L&T's shares soaring by 9% to a record high of ₹2,756 after the buyback announcement. While the stock currently trading at 2679 up 1.53%, its performance remains robust.
L&T's shares have strongly outperformed the Sensex benchmark With a gain of over 41% for L&T versus Sensex's 11%  during the same period.

Analysts' outlook towards L&T remains bullish, with 38 out of 41 analysts maintaining a buy rating on the stock. One analyst suggests holding, while two recommend selling, according to Bloomberg data. The average 12-month analyst price targets indicate a potential upside of 6.3%.

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L&T's order book has witnessed a substantial 14 percent year-on-year rise, crossing the notable ₹4 lakh crore milestone. The infrastructure projects segment has particularly shone, securing an order inflow of ₹40,000 crore during the current quarter, reflecting a staggering 100 percent YoY growth.

International orders now constitute 29% of the total order book, mainly originating from the Middle East and related to oil and gas, core industrialization, and energy transition initiatives. Looking ahead, L&T's prospects remain promising, with a robust ordering pipeline of ₹10 lakh crore expected for the remaining three-quarters of FY24.

Recent Orders

The company's construction unit in the Middle East has proudly won significant orders for its power transmission and distribution business. These orders fall under the "large" category, Orders that fall within the range of ₹2,500 crore and ₹5,000 crore are categorized as "large" by L&T. According to an official announcement, the engineering and construction conglomerate shared that its Power Transmission and Distribution (PT&D) business has achieved key milestones in the region. The first major achievement is in the United Arab Emirates (UAE), where the company will create a 220kV Gas Insulated Substation and associated Transmission Lines for a well-known energy industry service provider.

In Dubai, the PT&D business has secured contracts for two new 132KV substations under a public services infrastructure company. Additionally, the company will build a significant 220KV overhead transmission line. In Kuwait, the company's power transmission and distribution business has successfully obtained an order to build four new 132KV substations in the Al Sabah Medical District. The scope of work includes control, protection, automation, communication systems, and related civil and mechanical tasks.

Furthermore, ongoing projects in Qatar and Saudi Arabia have led to additional orders. These achievements highlight the company's dedication to enhancing the power infrastructure in the Middle East and its role as a significant player in the region's growth.