Larsen and Toubro (L&T) Registers a Robust Net Profit of ₹2,493 Crore in Q1FY24


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L&T's Historic ₹10,000 Crore Buyback

A Historic Move by L&T

Larsen & Toubro (L&T), the renowned promoter-less construction and engineering behemoth, has taken a historic step by announcing its first-ever buyback offer in its eight-decade history. The company plans to buy back shares worth up to ₹10,000 crore from its public shareholders, signifying a momentous move to reward its valued investors. This landmark decision was approved by the board, marking the beginning of a new era for the conglomerate.

L&T's Buyback Plan

L&T will offer to buy back a 2.4% stake, equivalent to 33.33 million shares, from its public shareholders through a book-building process on the stock exchange. The buyback offer will be made at a substantial premium, offering up to ₹3,000 per share, which represents a remarkable 17% premium to the current market price of ₹2,562.

A Thoughtful Gesture by the Outgoing Chairman

This buyback plan is seen as a thoughtful gesture by the outgoing chairman, AM Naik, who has been an esteemed figure in the engineering and construction industry. Under his leadership, L&T has achieved numerous milestones in the global equipment, technologies, and practices space. By incentivizing the company's public stakeholders through this buyback offer, Naik leaves a lasting legacy as he hands over the reins to SN Subrahmanyan.

Rewarding Shareholders and Unleashing Value

The buyback, along with a special dividend for FY2023, is aimed at rewarding shareholders and boosting the company's stock price by reducing the free float. L&T, with its debt-free status and strong financial performance, is poised for a promising future, attracting positive recommendations from most brokerages.

Buyback Funding and Investor Participation

If approved by the Securities and Exchange Board of India (SEBI), the buyback will primarily be funded through the company's reserves and surplus. L&T's total reserves and surplus as of March 31, 2023, stood at ₹88,577.76 crore, reflecting the company's robust financial position. While some shareholders may choose to participate in the buyback, others may anticipate even higher returns over the long term, considering the company's impressive track record and potential for growth.

L&T's Path of Consolidation

Over the past years, L&T has implemented various consolidation measures to streamline its business and unlock real value for shareholders. Notably, the recent merger of its wholly-owned subsidiaries, L&T Innovation Campus (Chennai) Ltd with L&T Seawoods Ltd, is a strategic move to enhance operational efficiency and focus on core strengths.

A Bright Future for L&T

With a market capitalization of ₹3.7 trillion, L&T has consistently outperformed the broader market index Nifty 50, demonstrating its resilience and growth potential. As the company forges ahead with its strong foundation and customer-centric approach, it continues to be an attractive proposition for investors seeking long-term value.

Conclusion

In conclusion, L&T's decision to embark on its first-ever buyback worth ₹10,000 crore is a remarkable milestone in its illustrious journey. This move underscores the company's commitment to its shareholders and its relentless pursuit of excellence in the construction and engineering domain. As L&T continues to shape the future with its innovative solutions and unwavering dedication, investors can look forward to being part of a thriving success story.