L&T share buyback will be fully subscribed: CFO Raman
2 min read 27 Jul 2023, 04:23 PM ISTL&T proposed to buy back shares worth as much as ₹10,000 crore at a maximum price of ₹3,000 per share
PremiumNew Delhi: Larsen & Toubro (L&T) Ltd is confident that its buyback of shares will be fully subscribed as it offers shareholders around 15% premium to the market price, chief financial officer R. Shankar Raman told Mint in an interview.
“If you look at various offers that have been put out, they've been between 15 and 20% premium and our assessment of the market is that it is around 15% premium. It's not a number but around that could go well. This premium for people will encourage investors to participate and the premium should be sufficient... even if they want to participate in the buyback and then come back to own the stock later from the open market... they still should have an opportunity to do that," Raman said.
The construction major earlier this week proposed to buy back shares worth as much as ₹10,000 crore at a maximum price of ₹3,000 per share. L&T aims to repurchase 33.33 million shares, or 2.4% of outstanding stock, from the public through a book-building process.
On Thursday, L&T shares closed around ₹2,662 on the BSE, up 0.6% from the previous close.
“We've now set the approval process for shareholders in motion and will provide 30 days for their approval... My sense is that I'm reasonably confident as a person representing L&T that the shareholders will find value," he added.
L&T made the buyback announcement alongside the release of its quarterly earnings. In Q1, revenues from L&T’s core business—project and manufacturing—rose 49% year-on-year to ₹32,718 crore, aided by improved execution across segments.
Further, order inflows from this segment jumped 80% y-o-y to almost ₹50,400 crore buoyed by the Mumbai-Ahmedabad High Speed Rail project contract.
“The order book is split between all of these sub-segments and each one of them has more than ₹50,000 crores of orders. So, my sense is between hydrocarbon and infrastructure, this takes care of possibly the next two and a half - three years of revenue," Raman added.
Speaking on the performance during the general elections that are due next year, as the government remains the biggest investor in infrastructure projects, and the private sector investment has not come back as aggressively as expected, he said the first nine months are likely to be a little more active than the last three months, but it all depends on the dates that get announced.
On private sector investment, Raman said "I find that private investment is largely dominated by energy transition investments. People who are investing in solar, and people who are investing in alternate fuel, account for half of the investment in the private sector, while the other chunk that is happening is around real estate both commercial residential as well as public real estate, also some activity levels have come back including spaces like the hospital. So, Private sector investment has remained at the same levels as compared to fourth quarter, that is 32%."
