From Infrastructure to Innovation: Why L&T Shines

Reading Time: 3 minutes

L&T (Larsen & Toubro) is not just another company; it is often seen as a proxy for India’s infrastructure story because it is one of the largest and most diversified infrastructure companies in the country. It has a remarkable track record of executing large and complex projects across various sectors, including construction, engineering, manufacturing, and energy.

Here’s why L&T is slowly becoming an investor favourite:

1. Impressive Order Book: As of September 2023, L&T boasts its highest-ever order book, valued at ₹4.5 trillion, with a whopping 72% year-on-year growth. This signifies a strong demand for their services, especially in the hydrocarbon segment, which is driving remarkable growth.

2. Competitive Advantage: L&T’s in-house design, engineering, and fabrication capabilities for critical equipment and systems give it a competitive edge. This self-reliance reduces costs and enhances efficiency.

3. Diversification Beyond Infrastructure: L&T isn’t limited to infrastructure alone. Through its subsidiary, it has ventured into IT services and solutions, offering a range of services such as data analytics, digital consulting, and cyber security. The merger of LTI and Mindtree has made L&T a significant player in the Indian IT sector.

4. Space and Defence Partnerships: L&T has been a trusted partner of ISRO for over five decades, contributing to India’s space missions. Its involvement in manufacturing critical equipment for space exploration is a testament to its technological prowess. L&T is also actively supporting India’s defence industry through partnerships with DRDO and the armed forces.

5. Forward-Looking Initiatives: L&T has embraced the digital age by launching digital platforms like L&T SuFin and L&T EduTech. These initiatives are poised to benefit from the global digitalization trend. Additionally, the company’s foray into designing semiconductor chips is well-timed to address the chip shortage issue.

6. Strong Financial Performance: L&T’s financials are impressive. In the last three years, it achieved a compound annual growth rate (CAGR) of 10% in revenue and 39.3% in net profit. The return on equity (RoE) and return on capital employed (RoCE) have shown substantial improvements.

7. Consistent Stock Growth: Over the past three decades, L&T shares have grown at a CAGR of 26.4%, outperforming the BSE Sensex benchmark index. This consistency in stock growth reflects the company’s stability and potential for investors.

In summary, L&T can be a good pick due to its robust presence in India’s infrastructure sector, diverse revenue streams, strategic technological partnerships, and a history of impressive financial performance. Moreover, the company’s forward-looking initiatives make it well-positioned to benefit from emerging trends. While investing always carries some degree of risk, L&T’s track record and strategic positioning make it a compelling option for long-term investors looking for steady growth in their portfolios.

Liked this story? Watchlist your favourite smallcases to receive exclusive and curated stories!

Check out Weekend Investing smallcase here

Explore Now

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The content in these posts/articles is for informational and educational purposes only and should not be construed as professional financial advice and nor to be construed as an offer to buy/sell or the solicitation of an offer to buy/sell any security or financial products. Users must make their own investment decisions based on their specific investment objective and financial position and use such independent advisors as they believe necessary.

WEEKENDINVESTING ANALYTICS PRIVATE LIMITED is a SEBI registered (SEBI Registration No. INH100008717) Research Analyst

Shivani Shah

Content & marketing @smallcaseHQ The content in this article is purely the author’s personal opinion and is for informational and educational purposes only. It should not be construed as professional financial advice and nor to be construed as an offer to buy /sell or the solicitation of an offer to buy / sell any security or financial products. The views and opinions stated in the content belong to the author. Smallcase Technologies Private Limited does not uphold nor promote any of the views / opinions.

Cancel reply

Dislaimer: This platform is intended for informational purposes only and is not intended to provide investment advice. The stock prices displayed are delayed and may not reflect the most current market conditions. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. You can also consider consulting a financial advisor before making any investment decisions. Smallcase Technologies Private Limited shall not be responsible for any losses that may occur as a result of using this platform.

The views expressed in this article are those of the author and do not necessarily reflect the views of Smallcase Technologies Private Limited (STPL) or any of its associates. The information provided in this article is for educational and informational purposes only. Investors are responsible for their investment decisions and are responsible to validate all the information used to make the investment decision. Investors should understand that his/her investment decision is based on personal investment needs and risk tolerance, and performance information available on here is one amongst many other things that should be considered while making an investment decision. Past performance does not guarantee future returns.

Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The examples and/or scurities quoted (if any) are for illustration only and are not recommendatory.

The content and data available on the website, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk. Data used for calculation of live returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here.

The user agrees to assume complete and full responsibility for the outcomes of all of his/her investment decisions that he/she makes, including any direct, indirect, incidental, consequential, special, punitive or any other losses/damages if any that may be incurred by him/her. Smallcase Technologies shall not be responsible or liable for any direct, indirect, incidental, consequential, special, punitive or any other losses/damages arising out of the recipient's investments. For disclosures related to Smallcase Technologies Pvt Ltd, please visit this page .

All smallcases present in the articles are created by SEBI licensed entities. The disclosure of these entities can be found below: