L&T looking overseas to beat local slowdown

22 Nov 2011
Larsen and Toubro (L&T), India's biggest engineering conglomerate, is targeting overseas revenue growth as part of a strategy to beat a slowdown in India. Ships-to-software firm L&T last month slashed its order growth guidance for the financial year to March, as it warned of project deferrals and sluggish investor appetite in India thanks to high interest rates and a gloomy economic outlook. L&T plans to increase its revenue share from overseas projects to 15-20% from 10-12% currently. It's essentially an India de-risking strategy. Larsen, with a market capitalization of Rs 77,535 crore, has aggressively targeted overseas projects in recent months, and has announced Rs 5,685 crore worth of new foreign contracts, mainly for hydrocarbon firms in the West Asian region, since August. India has pledged to spend Rs 1 lakh crore on upgrading its creaking power plants, railways and ports in the five years to 2017. Private cash has been pencilled in for half of that. But investments have slowed in recent quarters, as stubbornly high inflation, 13 interest rate hikes since early 2010 and rising commodity prices bite. Companies also point fingers at a policy paralysis in New Delhi. Larsen, which gets more than 80% of its revenue from the domestic market, cut its order growth guidance for the current fiscal by a third to 5% last month, blaming slowing investments and rising competition. It has not seen any cancellations in the order book.
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