The Hindu Business Line : L&T stock hits 52-week low

Mumbai, Jan. 22 Even as Larsen and Toubro appear keen on being a suitor for the beleaguered Satyam Computer Services, the L&T stock on Thursday touched its 52-week low of Rs 652 on the BSE, before closing 3.3 per cent lower over the previous close at Rs 663.90.

L&T Capital, a subsidiary of L&T, raised its stake in Satyam to about 3.95 per cent, a little before Satyam’s founder-Chairman, Mr Ramalinga Raju, made his disclosure.

“Fundamentally L&T is very strong, considering they had given higher advance tax payments this quarter, but the markets have taken its efforts to acquire Satyam negatively,” said Mr Waqar Naqvi, CEO, Tarus Mutual Fund.

Analysts estimate the average acquisition price to be around Rs 157, which takes the estimated buying value to about Rs 418 crore.

They view the event in negative light as it has already led to a substantial portfolio loss at the prevailing price of Satyam.

There are uncertainties and issues of corporate governance concerning Satyam. Given the lack of authenticity of Satyam’s financials it would become extremely difficult to put a value on the company.

Satyam is likely to face more litigation such as the US class action lawsuit and the acquirer might have to face additional liability of unpaid litigations in addition to the company being under the scanner of various government agencies. Pending emergence of greater clarity, a strategic take-over of Satyam was not right and it would adversely affect the sentiment towards the L&T stock, they said.

In addition, Motilal Oswal researchers said while there had been no meaningful delays till date for L&T, they believe that the probability of execution challenges for segments such as metals/minerals (8-9 per cent of order book), airports (9-11 per cent of order book) and real estate (6 per cent of order book) had increased.

Green-field projects

Most green-field projects were likely to be postponed given poor demand conditions and funding constraints. Airport projects, comprising Mumbai and Delhi airports were facing issues such as delay in achieving financial closure and in monetisation of real estate, besides decline in passenger traffic growth.

Related Stories:
L&T open to alliance with Satyam
L&T says no strategic interest

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