L&T earnings raise 'multiple red flags' - Citi; stock slumps

Wed Jul 30, 2014 1:06pm IST

A man waits at a bus-stop with an advertisement of Larsen & Toubro outside the company's manufacturing unit in Mumbai January 22, 2014. REUTERS/Danish Siddiqui/Files

A man waits at a bus-stop with an advertisement of Larsen & Toubro outside the company's manufacturing unit in Mumbai January 22, 2014.

Credit: Reuters/Danish Siddiqui/Files

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Reuters Market Eye - Citigroup downgrades Larsen & Toubro Ltd (LART.NS) to "neutral" from "buy", citing "rich" valuations and says Q1 "raises multiple red flags," including lower-than-expected standalone sales and margin details.

Earnings "were a warning that investors/analysts need to curb their enthusiasm,” the bank adds.

Deutsche Bank also downgrades L&T, to "hold" from "buy", citing concerns about valuations and says large order wins are in the low-margin hydrocarbons sector.

L&T falls as much as 7.9 percent, heads for biggest fall since July 2009.

(Reporting by Manoj Rawal)

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Comments (1)
Harrry wrote:
L&T is hurtling down but top brasses are soaring high, retirement age (75), compensation (21 cores) one of highest and the best, backed by generous dose of ludicrous pretexts and funny pretenses. Reuters: “Dhamra Port sale rescued L&T from posting loss; Citigroup says, Q1 raises multiple red flags”. Economic Times: “L&T headed for the biggest fall since July 2009”. Business Standard: “L&T’s return on capital employed(ROCE) fell to 11 % from a peak of 25 % in 2006-07.” Money Control (March 2014): “Top executives of L&T on selling spree, A M Naik leading the pack, sold shares worth about Rs 71.99 crores”. No wonder if L&T stock plunges to 3 digits. The oxymoron – Mr. Naik & Company by their own admission are NOT working for money but entitled to stocks up to 1 % of stakes worth about 1500 crores. First Post: “no TCS, there may be no Tata group worth speaking about; worth of the rest of the group is a third of TCS”. L&T Infotech, a big time laggard, failed to cut even 1 % of IT business pie of $118 bln in India, is languishing at less than $ 1bln in 20 years. Quite an overlap with junior engineer turned Executive Chairman Mr. AM Naik’s tenure at the top for last 15 years.———————————————————–
This ‘National Sector’ entity, legacy of true founders Mr. Larsen and Mr Toubro is badly hijacked and is in ghostly clutches of 70 ton gorillas, never-say-retire and outdated not-ready-to-extinct dinosaurs. It’s a leadership debacle and vacuum at L&T created and nurtured by top brasses. In a country where millions are jobless; retirement age of 75 for top (failed) executives in ‘national sector’ entity is absolutely SCANDALOUS. Its high (low) time, state owned entities LIC/UTI largest stakeholder’s at L&T should intervene to show red flags to the Super Human top brasses. STOP or they will go on till 80 or 90 who knows? It’s time to act before National Treasure L&T turns into, and gods forbid – Satyam or Enron. GOI/LIC/UTI please fix retirement age at L&T at par with MNCs, PSUs (BMW, Infosys – 60, PSUs – 60, RBI Governor 62). All and sundry 60+ at L&T should leave NOW instantly, to make way for young forward looking technocrats. L&T is in dire need of Information Age leadership. What to say about the ones who were born before independence, India got its first PM born post independence; average age of India will be 29 years in 2020. Why retirement for top brasses at L&T is 75 far-far-far higher than 60? Indeed a 15 billion dollar question.

Aug 01, 2014 5:47pm IST  --  Report as abuse
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