Larsen & Toubro advanced further on Friday, following good buying support.
The stock of India's largest cement, engineering & construction conglomerate was steady at Rs 193.70 on the BSE, up by 1.76%, in early-afternoon trades. Over 140,000 shares changed hands on the counter till 12:26 IST.
In five sessions, the Larsen & Toubro rose by 5.5% from Rs 183.60 on 31 January 2003.
Analysts said the rise in the L&T scrip was purely on bargain hunting, following hopes that the company may do well in the coming quarters due to good growth in its engineering and construction division as well as in the cement division. The E&C division accounts for 60% of the company's total revenues, while the cement division contributes 27%.
Earlier, the company issued a guidance stating that the E&C division is expected to show a growth of over 20% in revenues for the full year ending 31 March 2003.
Operating margins are expected to be better in the last quarter, resulting in overall improvement in margin for the year. Barring unforeseen circumstances, the company is optimistic of a good performance for the financial year.
The E&C division is expected to do well due to the boom in housing, road construction and infrastructure activity in the country, which may boost the demand for the company's cement.
Analysts said the surge in the scrip in the last few sessions was mainly on the rise in the company's cement dispatches for January 2003. L&T is a major player in south India were the demand for cement has picked up following the Golden Quadrilateral project. As per the data available, cement prices in the south have risen to Rs 150-160 per bag, whereas cement prices in the western region, the largest market for cement in India, have dropped by Rs 11-12 in the third week of January 2003 to Rs 148-150 per bag.
For January 2003, cement dispatches of L&T spurted by 11.6% to 960,000 tonnes, while production was at 940,000 tonnes, down by 1.05% from a year earlier.
Last month, L&T announced that it had bagged orders worth $ 32.5 million (Rs 156 crore) from SPF-TKP OMIFPRO SNC, a joint venture of Snamprogetti, Italy and Technip Coflexip, France, for supply of equipment to Oman India Fertilizer Company in the Sultanate of Oman. L&T's heavy engineering division and the engineering & construction division will jointly execute these orders.
For the third quarter ended 31 December 2002, L&T registered a 48% rise in net profit to Rs 80.67 crore as compared to Rs 54.51 crore in the corresponding period last year. Total income increased by 31% to Rs 2,371.72 crore (Rs 23.71 billion) from Rs 1,809.77 crore (Rs 18.09 billion) in DQ 2001.
BSE Code: 500510
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