InvestorQ : How has been the performance of L&T in the markets over the last 3 years?
sara Kunju made post

How has been the performance of L&T in the markets over the last 3 years?

Mary Joseph answered.
5 months ago

The stock of L&T has been a major laggard for the last few years. In fact, it never got back to the dominance that it enjoyed prior to 2012 when the down cycle in the capital good segment first started off. However, what we are getting to see now is that L&T is actually displaying the typical “tale of two stocks” syndrome.

Let us consider some numbers. Its market cap at Rs.180,000 crore is exactly where it was in 2017. That means; there has been not fresh wealth created post 20178. However, that is only one side of the story. L&T performance could have much worse had it not been for its IT subsidiaries like L&T Infotech and L&T Technology Services.

For example LTI and LTTS have seen their market cap multiply 3-fold in last 3 years. Despite that if the value of L&T has remained static it only means that the core businesses of L&T have actually destroyed value. If you add Mindtree, then IT contributes close to 40% of the value of the L&T conglomerate as of today.

The phenomenal performance of the technology driven businesses of the L&T group has been more than offset by the value destruction by L&T Finance and the core engineering, procurement and construction or EPC business of L&T. The Infrastructure boost is yet to yield dividends for L&T and Mindtree was perhaps the best strategic decision for L&T.