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L&Tplanstoraise$500millionviaQIP
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ByIndulalPM&RajeshMascarenhas,ETBureau|Updated:Oct24,2016,01.44AMIST

MUMBAI:EngineeringandconstructionconglomerateLarsenandToubro(L&T)plansto
raiseasmuchas$500million(Rs3,350crore)bysellingsharestoinstitutionalinvestors,
joiningtheleagueofagroupoflargecompaniestakingadvantageofaliquiditydrivenmarket
rallytofundtheircapitalrequirements.

RELATEDCOMPANIES

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L&T

Theissue,expectedtobelaunchedinafewweeksaftergettingtheboardandshareholder
approvals,willbearealtestoftheinstitutionalappetiteforcompaniescateringtoIndiasinfrastructuresector.L&Tsboardisexpectedto
approvetheproposedfundraisingplanasearlyasthisweek,multiplesourcesclosetotheissueprocesstoldET.
AnemailquerysenttoL&Tdidnotelicitanyresponse.L&TisIndiasbiggestengineeringandconstructionfirmwithamarketcapitalisation
ofRs1,40,829crore.Thestockhasgained20%insixmonths,significantlyoutperformingthebenchmarkindex,whichhasgained8.66%
duringthisperiod.AnalystssaidinvestorinterestinL&Tsupcomingsharesalecouldbestrongasthestock,evenafteritsrecentrally,is
tradingat15timesitsSeptember2018estimatedcoreearnings,whichislowerthanitsaveragevaluations.

WepreferL&Tinthecapitalgoodssectorandrecommenditasatoppickinthelargecapspace,giventhatitoffersthestrongestgrowth
profilewithvisibilityandimprovementsintheoffing,saidVivekSharma,analyst,ICICISecurities.
Webelieveimprovementinthecorebusinesswouldnotonlydriveearningsbutalsotheearningsmultiple.Nearlyhalfadozen
companieshaveraisedaboutRs3,700croreinSeptemberbysellingsharestoinstitutionalinvestors,threetimeswhatwasgeneratedin
thefirsteightmonthsoftheyear.IndiancompaniesareexpectedtoraiseRs10,00012,000crorebysellingsharestoqualifiedinstitutional
investorsinthenextfewweeks,ETreportedlastmonth.
L&Twillusethesharesaleproceedstofundexpansion.Thedomesticengineeringgiantplanstodoubleitsrevenuesinthenextfiveyears
asitfocusesonsunrisesectorssuchasdefenceandexploresnewmarketssuchasAfrica.
Thecompanyaimstoachievea15%compoundedannualgrowthratetoreachthattargetasitbelievesarevivalinsentimentandan
expectedfurthercashflowintothecoreinfrastructurespacewillhelpittokeeptheorderinflowmomentum.L&Tsconsolidateddebtstood
atRs1,01,517croreasofMarch.IthaswonkeyprojectsinthewesterndedicatedfreightcorridorlayingoftracksfromIqbalgarhto
Vadodara,atotalof725kmelectrification,andsignalingandtelecommunicationsworksonastretchof897kmfromVadodaratoJNPT,
Mumbai.

Bankersexpectmanymorecompaniesintheengineeringandconstructionsectorstotapthemarkettoraisemoneywithinvestment
activitysettopickup.BetweenJanuaryandSeptember,13companiesraisedRs4,468crorecomparedwith32companiesthatraisedRs
19,064.9crorethroughtheQIProuteinallof2015.Earlierlastmonth,MothersonSumiraisedaboutRs2,000crore,whileBharat
FinancialsgarneredRs750crorethroughQIP.
Intheyearbeforethat,33companiesraisedRs31,684.2crore,accordingtoPrimeDatabase.
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