A couple of days ago, a friend of mine expressed his concern over the Q3 results of Larsen and Toubro. He had booked his profits partly, looking at the downfall in the stock post the results. Below is my response to the same.
Booking profits partly is always good, especially in cases where the market see-saws like mad. Case in point is the way the Indian markets have been behaving for the last 10 days.
Having said that, L&T is a conglomerate which is too big to fail and would create enormous value in the coming years. The company had planned an IPO of its IT unit L&T Infotech but had to cancel it when the markets tanked all the way to 8k levels. It has a good number of companies running successfully in the JV format , and also bought DBS Chola's Mutual Fund arm in Sept 2009 through L&T Finance (Link)
Within the next couple of years, the company would be take its Infotech and Finance arms public, creating value for existing shareholders. A look at the lines of business, financials, and rich history of paying dividends would qualify this as a stock for long term investment.
Read an analysis of the Q3 results of L&T here, and also what highly rated analysts from IL&FS and Kotak have to say on the stock
Hold at the current levels, and accumulate on every decline is what i would suggest
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