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This stock has turned Rs 1 lakh into Rs 2.5 crore in 29 years

This stock has turned Rs 1 lakh into Rs 2.5 crore in 29 years

This stock has turned Rs 1 lakh into Rs 2.5 crore in 29 years
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By Pranati Deva  Sept 6, 2019 1:10:36 PM IST (Published)

Trading around Rs 6 in 1990, the stock hit its all-time high of Rs 1,607 per share in May 2019, giving a 25,287 percent return to investors in 29 years.

Larsen & Toubro (L&T) has always been an investor favourite stock. Since its incorporation, it has proved to be a company with strong fundamentals and robust earnings. The scrip has gained over 25,000 percent since 1990.

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Trading around Rs 6 in 1990, the stock hit its all-time high of Rs 1,607 per share in May 2019, giving a 25,287 percent return to investors in 29 years. To put in perspective, a Rs 1 lakh investment 29 years ago, would have turned to Rs 2.5 crore in 2019.
However, the stock has fallen 8 percent in 2019 and 2 percent in the last 1 year.
Despite the fall, analysts continue to be bullish on the stock on strong earnings, robust order book, and stable management.
L&T reported 20.5 percent year-on-year growth in June quarter of FY20 net profit, beating all analyst estimates, driven by 10 percent revenue growth and EBITDA margins expanding to 11.2 percent.
Orders worth Rs 38,700 crore were bagged in the Q1FY20 with international orders worth Rs 9,005 crore constituting 23 percent of the total order flows. Consolidated order book of the group stood at Rs 2.94 lakh crore as on June 30, with international order book constituting 21 percent of the total order book. The company also maintained its revenue growth and order inflow guidance at 12-15 percent and 10-12 percent for FY20.
"Given its healthy earnings per share (EPS) and strong sales growth of 12-15 percent as per FY20 guidance, we find L&T to be well-poised to deliver 17 percent EPS CAGR over FY19-21 even assuming flattish margins. We reiterate BUY on L&T given its inexpensive valuations, strong order books, healthy execution pace and potential for EPS growth," JM Financial said in a report.
Moreover, the government has announced a significant push in infra and sub-sectors including roads, railways, port, airports, and urban infrastructure. The capex outlook for these segments remains strong for the next 3-5 years. With 16 percent market share in the last five years, L&T has been able to maintain a leadership position in the infra space, said Axis Securities in a report.
Apart from infra, Hydrocarbon order inflows in FY19 have been strong and therefore are expected to show major contribution in FY20 and FY21, it added.
The company was incorporated in 1946 as a private limited company. It was first established as a partnership firm founded by two Danish engineers Henning Holk Larsen with Soren Kristian Toubro in Mumbai.
In December 1950, the company became a Public Company with a paid-up capital of Rs 2 million.
Larsen and Toubro (L&T) is India's largest engineering and construction company. Apart from core construction activity, it also has subsidiaries and manufacturing JVs in power, forging and shipbuilding. It is also involved in various projects in roads, ports, railways, and power.
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