A Report on Research Analysis

1. RESEARCH REPORT:
LARSEN & TOUBRO
COMPANY ANALYSIS
BHAGWATI MAURYA
LARSEN & TOUBRO

2. 1
1 RESEARCH REPORT: Larsen & Toubro
A Report on
Research Analysis of Larsen & Toubro
Prepared by
Bhagwati Maurya
To
Finlatics
Year: 2019 – 20

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2 RESEARCH REPORT: Larsen & Toubro
Contents
1.General Overview
2.Management
3.S.W.O.T Analysis
4.Competitive Analysis
5.Conclusion

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3 RESEARCH REPORT: Larsen & Toubro
About Company
Registered Address:
L&T House, Ballard Estate
P.O. Box: 278,
Mumbai: 400 001
India
Email: infodesk@larsentoubro.com
Key People’s
A.M Naik Group Chairman
S.N Subrahmanyam CEO &MD
R. Shankar Raman CFO
Shailendra Roy Director & Sr. Executive VP
D.K Sen Director & Sr. Executive VP
M.V Satish Director & Sr. Executive VP
J.D Patil Director & Sr. Executive VP
Company’s Background
Industry Conglomerate
House Name/Group Larsen & Toubro House
Year of Incorporation 1946
Auditors: Deloitte Haskins & Sells LLP
Listed on: Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)

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4 RESEARCH REPORT: Larsen & Toubro
1. GENERAL OVERVIEW
Summary
Larsen & Toubro is a major technology, engineering, construction,
manufacturing and financial services conglomerate, with global operations.
L&T addresses critical needs in key sectors - Hydrocarbon, Infrastructure,
Power, Process Industries and Defence - for customers in over 30 countries
around the world.
L&T is engaged in core, high impact sectors of the economy and our integrated
capabilities span the entire spectrum of ‘design to deliver’. With 8 decades of a
strong, customer focused approach and a continuous quest for world-class
quality, we have unmatched expertise across Technology, Engineering,
Construction, Infrastructure Projects and Manufacturing, and maintain a
leadership in all our major lines of business.
Every aspect of L&T's businesses is characterised by professionalism and high
standards of corporate governance. Sustainability is embedded into our long-
term strategy for growth.
The Company’s manufacturing footprint extends across eight countries in
addition to India. L&T has several international offices and a supply chain that
extends around the globe.
History
Larsen & Toubro Ltd., incorporated in the year 1946, is a Large Cap company
(having a market cap of Rs 188970.22 Crore) operating in Miscellaneous sector.
Larsen & Toubro originated from a company founded in 1938 in Mumbai by
two Danish engineers, Henning Holck-Larsen and Søren Kristian Toubro.
After India's independence in 1947, L&T set up offices in Calcutta
(now Kolkata), Madras (now Chennai) and New Delhi. In 1948, 55 acres of
undeveloped marsh and jungle was acquired in Powai, Mumbai. A previously
uninhabitable swamp subsequently became the site of its main manufacturing
hub. In December 1950, L&T became a public company with a paid-up capital
of ₹20 lakh (US$28,000). The sales turnover in that year was ₹1.09
crore (US$150,000). In 1956, a major part of the company's Mumbai office
moved to ICI House in Ballard Estate, which would later be purchased by the
company and renamed as L&T House, its present headquarters.

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5 RESEARCH REPORT: Larsen & Toubro
2. MANAGEMENT
The company’s top management includes Mr. A.M Naik, Mr. Adil Siraj
Zainulbhai, Mr.Ajay Shankar, Mr. Akhilesh Krishna Gupta, Mr. Arvind Gupta,
Mr. D.K Sen, Mr. Hemant Bhargava, Mr. Jayant Damodar Patil, Mr. M
Damodaran, Mr.M M Chitale, Mr.M V Satish, Mr. Narayanan Kumar, Mr. R
Shankar Raman, Mr. S N Subrahmanyam, Mr. Sanjeev Aga, Mr. Shailendra
Narain Roy, Mr. Subodh Bhargava, Mr. Subramanian Sarma, Mr. T Thomas
Mathew, Mr. Vikram Singh Mehta, Mrs. Naina Lal Kidwai, Mrs. Sunita Sharma.
Company has Deloitte Haskins & Sells LLP as its auditor’s as on 31-12-2018, the
company has a total of 1,402,220,289 shares outstanding.
Capital Structure
(Rs. In Crores)
Period Instrument Authorized
Capital
Issued
Capital
PAID – UP
Share
(nos)
Face
Value
Capital
2017 – 18 Equity
Share
325.0 280.3 1401369456 2.0 280.3
Larsen & Toubro Ltd. key Products/Revenue Segments include Income From
Construction Work which contributed Rs 66978.07 Crore to Sales Value (89.76
% of Total Sales), Income from Manufacturing and Trading Activities which
contributed Rs 5575.56 Crore to Sales Value (7.47 % of Total Sales), Other
Operating Revenue which contributed Rs 1042.08 Crore to Sales Value (1.39 %
of Total Sales), Other Services which contributed Rs 666.64 Crore to Sales
Value (0.89 % of Total Sales), Commission which contributed Rs 159.80 Crore
to Sales Value (0.21 % of Total Sales), Property Development which
contributed Rs 96.68 Crore to Sales Value (0.12 % of Total Sales), Lease Rentals
which contributed Rs 74.08 Crore to Sales Value (0.09 % of Total Sales) and
Engineering which contributed Rs 18.74 Crore to Sales Value (0.02 % of Total
Sales)for the year ending 31-Mar-2018.

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6 RESEARCH REPORT: Larsen & Toubro
Stability of Management
Company and Financial Analysis:
For the quarter ended 31-12-2018, the company has reported a Consolidated
sale of Rs 35708.87 Crore, up 11.31 % from last quarter Sales of Rs 32080.83
Crore and up 24.22 % from last year same quarter Sales of Rs 28747.45 Crore
Company has reported net profit after tax of Rs 2418.75 Crore in latest
quarter.
Financial Information:
The Company had shown consistent stability over past five years.
(Rs. In Crores)
Particulars/Years March 18 March 17 March 16 March 15 March 14
Total Income 77742.76 68393.18 62630.88 59936.47 58958.28
Total
Expenditure
67996.19 59111.26 53493.85 50808.07 49821.87
Reported PAT 5387.30 5453.74 5311.46 5056.18 5493.13
Particulars/Years March 18 March 17 March 16 March 15 March 14
Net Worth 49021.05 45859.54 40703.15 37069.01 33642.58
Total Liabilities 58798.98 55459.52 52924.29 49368.69 42996.76
Net Block 6465.55 6647.89 7243.81 7471.79 7655.55
Total Assets 58798.98 55459.52 52924.29 49368.69 42996.76
Key Items
Particulars/Years 2018 2017 2016 2015 2014
Equity Dividend
(%)
800.00 700.00 912.50 812.50 712.50
Share in Issue
(lakhs)
14013.69 9329.66 9314.79 9295.62 9269.13
EPS – Annualised
(Rs.)
38.44 58.46 57.02 54.39 59.26

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7 RESEARCH REPORT: Larsen & Toubro
3. S.W.O.T ANALYSIS
Strength
• Strong Free Cash Flow – Larsen & Toubro has strong free cash flows that
provide resources in the hand of the company to expand into new projects.
• Good Returns on Capital Expenditure – Larsen & Toubro is relatively successful
at execution of new projects and generated good returns on capital
expenditure by building new revenue streams.
• Strong distribution network – Over the years Larsen & Toubro has built a
reliable distribution network that can reach majority of its potential market.
• Superb performance in New Markets – Larsen & Toubro has built expertise at
entering new markets and making success of them. The expansion has helped
the organization to build new revenue stream and diversify the economic cycle
risk in the markets it operates in.
• Reliable Suppliers – It has a strong base of reliable supplier of raw material
thus enabling the company to overcome any supply chain bottlenecks.
Weakness
• High attrition rate in work force – compare to other organizations in the
industry Larsen & Toubro has a higher attrition rate and have to spend a lot
more compare to its competitors on training and development of its
employees.
• Not highly successful at integrating firms with different work culture. As
mentioned earlier even though Larsen & Toubro is successful at integrating
small companies it has its share of failure to merge firms that have different
work culture.
• Organization structure is only compatible with present business model thus
limiting expansion in adjacent product segments.
• Limited success outside core business – Even though Larsen & Toubro is one of
the leading organizations in its industry it has faced challenges in moving to
other product segments with its present culture.
• The profitability ratio and Net Contribution % of Larsen & Toubro are below
the industry average.

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8 RESEARCH REPORT: Larsen & Toubro
Opportunities
• The new taxation policy can significantly impact the way of doing business and
can open new opportunity for established players such as Larsen & Toubro to
increase its profitability.
• New customers from online channel – Over the past few years the company
has invested vast sum of money into the online platform. This investment has
opened new sales channel for Larsen & Toubro. In the next few years the
company can leverage this opportunity by knowing its customer better and
serving their needs using big data analytics.
• Opening up of new markets because of government agreement – the adoption
of new technology standard and government free trade agreement has
provided Larsen & Toubro an opportunity to enter a new emerging market.
• Stable free cash flow provides opportunities to invest in adjacent product
segments. With more cash in bank the company can invest in new technologies
as well as in new products segments. This should open a window of
opportunity for Larsen & Toubro in other product categories.
• Economic uptick and increase in customer spending, after years of recession
and slow growth rate in the industry, is an opportunity for Larsen & Toubro to
capture new customers and increase its market share.
Threats
• Shortage of skilled workforce in certain global market represents a threat to
steady growth of profits for Larsen & Toubro in those markets.
• Intense competition – Stable profitability has increased the number of players
in the industry over last two years which has put downward pressure on not
only profitability but also on overall sales.
• New technologies developed by the competitor or market disruptor could be a
serious threat to the industry in medium to long term future.
• Rising pay level especially movements such as $15 an hour and increasing
prices in the China can lead to serious pressure on profitability of Larsen &
Toubro
• Growing strengths of local distributors also presents a threat in some markets
as the competition is paying higher margins to the local distributors.

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9 RESEARCH REPORT: Larsen & Toubro
4. COMPETITIVE ANALYSIS
The two main competitors of Larsen and Toubro are ABB India Ltd. and
Gammon India Ltd.
Peer Comparison:
(Rs. In Crores)
Particulars/Name
of the Company
L&T India ABB India Gammon India
Market Capacity 194333.71 27379.62 60.98
Earnings Per
Share (EPS)
44.4 24.11 N/A
Price Earning
(P/E)
31.05 53.64 N/A
Dividend Yield
(%)
1.16 0.37 N/A
Net Profit 5387.30 510.89 -1983.09
Total Assets 58798.98 3611.03 3784.89
As per information, Market Capacity and Earning Per Share of L&T is greater
than ABB India.
Price Earning ratio of L&T is less than the ABB India Ltd.
The Net Profit and Total Assets of L&T is greater than ABB India, which shows
company can perform better in near future.

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10 RESEARCH REPORT: Larsen & Toubro
5. CONCLUSION
By reviewing, analysing and comparing all the information above, it shows that
company has maintained its stability of Profits and Dividends, which results in
strong relations among investors.
Company has been maintaining a healthy dividend pay-out of 30.59%.
Stock is trading at 3.46 times its book value. The company has delivered a poor
growth of 9.97% over past five years. Company has low return on equity of
13.22% for last three years.
But Company has maintained its profitability level and due to trend analysis
over past few years’ investors have Strong relation among its Company.
The Company has maintained stability in Dividend and also in their Profits.
End of the Report