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S. Vaidya Nathan

SHAREHOLDERS of Larsen & Toubro can book profits to cash in on the 62 per cent rise its stock price over the past five months. Re-entry can be contemplated at lower levels or upon listing of the engineering sector company's stock.

The rally in engineering sector stocks also encompassed L&T. Though the company is well placed in the engineering space, its strengths in bidding could get affected in the near term by the reduction in its balance sheet size, a consequence of the imminent demerger of its cement business.

Cutting exposures now would mean missing out on the open offer by Grasim Industries for the to-be-demerged cement business at Rs 171.3 per share. But in doing so, shareholders may avoid the risk of only a part of their holdings being accepted, which is a likely outcome. Further, investors can steer clear of the risk of the new cement company stock commanding low valuation, due to merger concerns.

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