L&T Final

FUNDAMENTAL AND TECHNICAL ANALYSIS OF L&T – MINI PROJECT
SCHOOL OF MANAGEMENT STUDIES AND RESEARCH

MBA
FUNDAMENTAL AND TECHNICAL ANALYSIS OF L&T -

MINI PROJECT
Submitted by
Mr. Samarth Rudrappa Shedi (01FM22MBA011)
Submitted To : Dr. Sagar Patil

Course : Security & Portfolio
Management
Subject Code : 20MBAE811
Table of Contents
Sl. No Topic Page No.
1. Company Overview
1.1 Beta, r and r² Calculation
2. Fundamental Analysis
2.1 Economic Analysis
2.2 Industry Analysis
2.3 Company Analysis
2.4 Ratio Analysis
3. Technical Analysis
3.1 Trend Analysis
3.2 Support & Resistance
3.3 Moving Average
3.4 Relative Strength Index
3.5 Bollinger Band
3.6 Money Flow Index
4. Questions & Answers
5. Conclusion
LARSEN & TOUBRO LIMITED (L&T)

Company Overview:
Name: Larsen & Toubro Limited (L&T)
Company Type Public
Industry Conglomerate (Engineering & Construction)
Founded in 7 Febr1946
Headquarters L&T House, Ballard Estate, Mumbai,
Maharashtra, India
Chairman & MD S N Subrahmanyan
CEO S N Subrahmanyan
Website http://www.larsentoubro.com/
Larsen & Toubro Limited, abbreviated as L&T, is an Indian multinational conglomerate, with interests in
engineering, construction, manufacturing, technology, information technology, military and financial
services. Conglomerate is a type of multi-industry company that consists of several different and unrelated
business entities that operate in various industries under one corporate group.
L&T was founded in 1938 in Bombay by Danish engineers Henning Holck-Larsen and Soren Kristian
Toubro. As of March 31, 2022, the L&T Group comprises 93 subsidiaries, 5 associate companies, 27 joint
ventures and 35 jointly held operations, operating across basic and heavy engineering, construction, realty,
manufacturing of capital goods, information technology, and financial services. On October 1, 2023, Shri. S
N Subrahmanyan took charge as Chairman and Managing Director of L&T.
Major Subsidiaries:
1. Construction:
 L&T Constructions (L&T Metro Rail Hyderabad)
 L&T Realty
2. EPC (Engineering, Procurement & Construction) Projects:
 L&T Energy Hydrocarbons
 L&T Power
3. Technology
 L&T Technology Services
4. Information Technology
 LTIMindtree
5. Manufacturing
 L&T Defence
 L&T Shipbuilding
6. Finance
 L&T-SuFin
7. Education
 L&T Edutech
Divestments: L&T has across the decades exited from several businesses. These include:
1. Cement
2. L&T-John Deere
3. L&T Case
4. L&T Medical Equipment and Systems
5. EWAC Alloys Limited
6. L&T Kobelco Machinery Private Limited
7. L&T Electrical and Automation Ltd
8. L&T Mutual Fund
9. L&T Infrastructure Development Projects Limited
Products & Services:
1. Construction
 Buildings & Factories
 Transportation Infrastructure
 Heavy Civil Infrastructure
 Water & Effluent Treatment
 Renewable Energy
 Power Transmission & Distribution
 Smart World & Communication
2. Construction & Mining Machinery
 Construction & Mining Equipment
3. Finance
 Housing Finance
 Loan Against Property
 Personal Loans
 Two-Wheeler Finance
 Farm Equipment Finance
 SME Loans
 Micro Loans
4. Heavy Engineering
 Process Plant
 Nuclear Power Plant
 Modification, Revamp and Upgrades
 Special Fabrication Unit
 Green Portfolio
5. Hydraulics
 Hydraulic Cylinders
 Swivel / Rotary Joints
 High Torque Low Speed Motors
 Radial Piston Pumps
 Customised Hydraulic Systems
6. Hydrocarbon
 Offshore
 Onshore EPC
 Modular Fabrication
 AdVENT
 Asset Management
 Offshore Wind
7. Minerals & Metals

 Minerals & Metals
8. Power
 Coal Based Power Plants
 Gas Based Power Plants
9. Rubber Processing Machinery
 Mechanical Tyre Curing Presses
 Hydraulic Tyre Curing Presses
 Tyre Building Machines
 Auxiliary Equipment
 Spares
 Tube Curing Presses
 Bladder Curing Presses
10. Semiconductors
 L&T Semiconductor Technologies
11. Shipbuilding
 New Construction – Defence Shipbuilding
 New Construction – Commercial Shipbuilding
 Ship Repairs, Refits & Mid-Life Upgrades
12. Valves
 Gate, Globe & Check Valves – Bolted Bonnet
 Gate, Globe & Check Valves – Pressure-seal
 Trunnion-mounted Ball Valves
 Triple-offset Butterfly Valves
 Digital Solutions
Stock Market Information (as on 21/3/2024)
 Closing price on BSE= Rs. 3562.3
Systematic Risk (Beta): Systematic risk refers to the risk inherent to the entire market or market segment.
Systematic risk, also known as undiversifiable risk, volatility risk, or market risk, affects the overall market,
not just a particular stock or industry. Beta (β) is a measure of the volatility or systematic risk of a security or
portfolio compared to the market as a whole.
 β = 1: If a stock has a beta of 1.0, it indicates that its price activity is strongly correlated with the
market.
 β < 1: A beta value that is less than 1.0 means that the security is theoretically less volatile than the
market.
 β > 1: A beta that is greater than 1.0 indicates that the security’s price is theoretically more volatile
than the market. For example, if a stock’s beta is 1.2, it is assumed to be 20% more volatile than the
market.
 β < 0: Some stocks have negative betas. A beta of -1.0 means that the stock is inversely correlated to
the market benchmark on a 1:1 basis. This stock could be thought of as an opposite, mirror image of
the benchmark’s trends.
Correlation Coefficient(r): The correlation coefficient r measures the strength and direction of the linear
relationship between the stock’s closing prices and the index’s closing prices. It ranges from -1 to 1.
 A positive correlation means that the r ranges between 0 to 1. This implies that as one security
moves, either up or down, the other security moves in the same direction.
 A negative correlation means that the r ranges between -1 to 0. This implies that two assets move in
opposite directions
 0 suggests no correlation.
R-Square (r²): R-squared is generally interpreted as the percentage of a security’s price movements that can
be explained by movements in a index. R-squared values range from 0 to 1 and are commonly stated as
percentages from 0% to 100%. An R-squared of 100% means that all movements of a security are
completely explained by movements in the index.
Beta 1.0051
r 0.4832
r² 0.2353 or 23.53%
Interpretation: A Beta value of 1.0051, which is greater than 1 indicates a L&T stock’s price is more
volatile than the overall market. The correlation coefficient of 0.4832 indicates that there is linear
relationship between the L&T and index. The r² value of 23.53% indicates that security is unreliable. It
indicates that L&T price movements are not more depends on market.
This indicates some portion of L&T’s price fluctuations can be explained by movements in the overall
market but it is less dependent on market movements.
Fundamental Analysis: Fundamental analysis is a method of assessing the intrinsic value of a stock. It
combines financial statements, external influences, events & industry trends. Factors considered for
fundamental analysis are
 Company’s structure and revenue
 Company’s profits over the years
 Revenue growth over the years
 Company’s debt
 Corporate governance
 Rate of turnover
Fundamental analysis consists of three main parts:
1. Economic analysis
2. Industry analysis
3. Company analysis
Economic Analysis: Economic analysis involves assessing the overall health and performance of a
country’s economy. This analysis is crucial for understanding the broader economic trends that can impact
investments. Economic Analysis consists the following factors.
 Gross Domestic Product (GDP): GDP is the total value of goods and services produced in an
economy. In a growing economy, GDP is high and companies post higher profits. Whereas during
recessions, profits fall leading to unemployment, lower spending etc. A steadily growing GDP is
good for business.
 Inflation: The rate at which the general level of prices for goods and services is rising. High inflation
reduces investor’s purchasing power. This reduces the overall demand in an economy. Low demand
means less revenue.
 Interest rates: The cost of borrowing and lending money, set by central banks. When interest rates are
high, businesses are forced to borrow money at high rates. This increases the cost of capital reducing
company’s profitability. When companies post less profits, its share prices are directly impacted.
 Budget and Tax Structure: Government spending and taxation policies influence economic activity.
Factors Considered Here:
1. Gross Domestic Product of India:
GDP (Gross Domestic Product) measures the total value of goods and services produced within a country’s
borders in a given time period, typically a year or a quarter.
Here are the GDP figures for India over the last 5 years:
Year Revenue From the data, we can see

2023 186269
that India’s GDP has been
growing over the past 5
2022 158788
years, with the exception
2021 139408 of 2020 when it declined
2020 147813 by 5.78%. This decline
2019 137056
could be attributed to the
global economic impact of
the COVID-19 pandemic. However, the economy rebounded strongly in 2021 with a growth rate of 17.92%.
The growth rate for 2022 was 7.45%, indicating a continued positive trend.
2. Budget Allocation:
India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion.
 Budget 2023-24 is complemented with the continuation of the 50-year interest-free loan to state
governments for one more year to spur investment in infrastructure and to incentivize them for
complementary policy actions, with a significantly enhanced outlay of ₹ 1.3 lakh crore (US$ 16
billion).
 Under the National Infrastructure Pipeline (NIP), projects worth Rs. 108 trillion (US$ 1.3 trillion) are
currently at different stages of implementation.
 An Urban Infrastructure Development Fund (UIDF) will be managed by National Housing Bank,
which will enable creation of infrastructure in Tier 2 and 3 cities by supporting viability gap funding,
enabling creation of more bankable projects, enhancing access to external funding, among others.
Interim Budget Allocation: The Interim Budget 2024 by the Government of India has made several
allocations and contributions to the Infrastructure Sector.
 Defence Sector: The allocation for the Ministry of Defence is Rs. 6.2 lakh cr.
 Road Transport & Highway: The allocation for the Ministry of Road & Transport is Rs. 2.78 lakh cr.
 Ministry of Railways: The allocation for the Ministry of Railways is Rs. 2.55 lakh cr.
 Ministry of Rural Development: The allocation for the Ministry of Rural Development is Rs. 1.77
lakh cr.
Industry Analysis: An industry analysis can usually be done by understanding the performance of the
particular sector. India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5
trillion.
 The India Infrastructure Sector Market size is estimated at USD 204.06 billion in 2024, and is
expected to reach USD 322.27 billion by 2029, growing at a CAGR of 9.57% during the forecast
period (2024-2029).
 In June 2022, the Minister of Road Transport and Highways, opened 15 national highway projects
worth Rs. 13,585 crores (US$1.7 billion) in Patna and Hajipur, Bihar.
 In October 2021, the Dubai government and India signed a contract in October 2021 to build
infrastructure in Jammu and Kashmir, including industrial parks, IT towers, multipurpose towers,
logistics centres, medical colleges, and specialized hospitals.
 In November 2022, National Investment and Infrastructure Fund (NIIF) is set up as a collaborative
investment platform between the Government of India, global investors, multilateral development
banks (MDB) and domestic financial institutions to facilitate investment across multiple sectors in
India through an India Japan Fund.
 Finance minister Nirmala Sitharaman’s Budget for 2023-24 underlines sustained focus on the
northeast for “inclusive development” as one of the seven priorities, which act as the ‘Saptarishi’
guiding the government through the “Amrit Kaal“.
 Under Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to
Rs.10 lakh crore (US$ 122 billion), which would be 3.3 per cent of GDP and almost three times the
outlay in 2019-20.
 2019-20.
SWOT Analysis of Indian Infrastructure Industry:
Strengths:
 India’s population growth and economic development require improved transport infrastructure,
including investments in roads, railways, and aviation, shipping and inland waterways.
 India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion.
Weakness:
 Fiscal Burden: Almost half of the total investment in the infrastructure sector is done by the
government through budget allocations. But Government funds have competing demands, such as,
education, health, employment generation, among others.
 Asset-Liability Mismatch of Commercial Banks: Commercial banking sector’s ability to extend
long-term loans to the infrastructure sector is limited.
Opportunities:
 Development of infrastructure has a multiplier effect on demand and efficiency of transport and
increases commercial and entrepreneurship opportunities.
 In June 2022, the Minister of Road Transport and Highways, opened 15 national highway projects
worth Rs. 13,585 crores (US$1.7 billion) in Patna and Hajipur, Bihar.
 In October 2021, the Dubai government and India signed a contract in October 2021 to build
infrastructure in Jammu and Kashmir, including industrial parks, IT towers, multipurpose towers,
logistics centres, medical colleges, and specialized hospitals.
Threats:
 Destructive flooding affects productivity.
 Land clearance issues cause major delays to infrastructure and construction projects.
Here, L&T being into the engineering construction sector the “NIFTY INFRA” indices is considered.
Indices Returns (in %) Stage
1 2 Years 3 Years
Year
NIFTY 58.65 67.37 95.83 Rapid Growth Stage

INFRA
Based on the returns percentages over the years, the industry is likely in the rapid growth stage. The
significant increase in returns from the first to the third year indicates a period of rapid expansion and
growth. Industries in the rapid growth stage typically experience high demand, increased market share, and
significant profit margins as they capture a larger share of the market. This phase is characterized by
expanding customer bases, growing revenues, and often heightened competition as the industry gains
momentum.
Company Analysis: Company analysis contains an evaluation & examination of a company, its financial
health & prospects, management strategy or marketing activities & its strengths & weaknesses.
Key Highlights:
 L&T posted revenue from operations of INR 1,86,269 Cr during FY23 compared to INR 1,58,788
Cr during FY22, an increase of 17.30%. On the profitability front, the company has posted a PAT
(Profit After Tax) of INR 12,624 Cr for FY23 as against the PAT of INR 10,291 Cr for FY22, an
increase of 22.67%.
 If we look at the financial performance over the Financial Year 2019 – 2023, the company has posted
a Revenue CAGR (Compound Annual Growth Rate) of 9% and a PAT CAGR of 11.43% from FY
2021 – 2023, which is relatively good.
 L&T’s debt has decreased from $18.08 B in 2019 to $14.69 B in 2023.
 In Q3 FY ’24, revenues rose by 26% to INR 393 billion year-over-year (YoY), driven by robust
execution and strategic growth in orders across sectors such as renewable EPC, water utilities, and
airports, topping INR 432 billion―a 33% increase YoY.
 EBITDA margin slightly decreased to 10.4% due to legacy project costs but improved sequentially.
Recurring PAT jumped by 20% to INR 29 billion due to strong momentum and tax efficiencies,
while the net working capital (NWC) to sales ratio improved by 240 basis points to 16.6%.
 Return on equity (ROE) improved by 280 basis points YoY to 15.2%, with plans for regular
shareholder returns as part of a continued focus on cash generation and divestments.
 Infrastructure and energy segments showed robust revenue growth, 27% and 24% respectively, while
IT segment growth was modest at 5%. L&T Finance Holdings, after major mergers, sets a stage for
growth with strong retail disbursement.
SWOT analysis of L&T.
Strength:
 Market leadership providing competitive edge: The company can leverage its strong brand name and
market leadership position to gain competitive advantage and also expand into international markets
 Strong technical expertise reinforce leadership position: L&T has set up an engineering and project
management centre in Abu Dhabi to undertake oil and gas related projects as well as engineering and
consultancy services
 Diversified revenues providing resilience: The company’s revenues were distributed among business
divisions as follows: engineering and construction, electrical and electronics, machinery and
industrial products, financial services, developmental projects and others. This enables L&T to
alleviate its business risk as fluctuations in a single offering have lesser impact on diversified
offerings and provide resilience to its revenues
 Over 45,000 employees form a part of its workforce
 It has offerings like Construction, Heavy equipment, Electrical equipment, Power, Shipbuilding,
Financial services and IT Services.
Weakness:
 Investment in Research & Development: Investment in research and development is below the
rapidly growing players in the industry. Even though Larsen & Toubro is consuming above the
industry average on research and development, it has not been able to compete with the leading
players in the industry regarding innovation.
 Labour Safety: The company’s labour works in an unsafe environment i.e. construction sites, real
estate projects, road construction where the risk to their life is higher. This is the place where the
responsibility of L&T increases in terms of ensuring its labour safety and sometimes it fails when
some unseen events happen with its labour.
Opportunity:
 Growth in Indian construction and engineering industry: The Indian construction and engineering
industry grew by 8% year on year. With expected high government and private spending on
infrastructure in the next 10 years on smart cities, metro projects etc. L&T is well placed to leverage
the opportunity created in the industry.
 Expanding Customer Base: LTI can gain from the acquisition of smaller consulting and financial
companies by expanding its customer base.
 Emerging Markets: Due to the engaging global market with globalization. This brings out the
greatest opportunities of managing the data like transactions, details, history, etc.
Threats:
 Strong Competitors: There are lots of competitors in the market. When there is already competition
from established players in the industry, then ultimately it will continue to diminish LTIs market
share.
 Bigger MNCs Entering India: Entering big size multinational companies into the domestic market
will lead to grabbing the attention of the clients. Hence, it will be hard for a domestic company to
sustain its standing in front of big companies.
 Exposure to Foreign Markets: Globalization brings opportunities, but at the same time, it also brings
a threat of being replaced by a foreign business.
Ratio Analysis: Ratio analysis compares line-item data from a company’s financial statements to reveal
insights regarding profitability, liquidity, operational efficiency, and solvency. Ratio analysis can mark how a
company is performing over time, while comparing a company to another within the same industry or sector.
Per Share Ratio:
1. Basic EPS(Earning Per Share): Basic earnings per share is a rough measurement of the amount of a
company’s profit that can be allocated to one share of its common stock. Stocks trade on multiples of
earnings per share, so a rise in basic EPS can cause a stock’s price to appreciate in line with the
company’s increasing earnings on a per share basis.
Formula: Basic EPS = (Net Income – Preferred Dividends) / Weighted Average Number of common
Shares Outstanding
Interpretation: From the above graph , there seems to be some fluctuation in the basic EPS over the
years, with a notable increase in 2021 followed by some variability in the subsequent years. These
fluctuations in Basic EPS can reflect the volatility of a company’s earnings, which may impact investor
sentiment and stock price stability.
2. Diluted EPS: Diluted earnings per share (EPS) is a measurement of a company’s earnings per share
if all convertible securities were converted. Diluted EPS considers what would happen if dilutive
securities were exercised. Dilutive securities are securities that are not common stock but can be
converted to common stock if the holder exercises that option. If converted, dilutive securities
effectively increase the weighted number of shares outstanding, which decreases EPS, thereby
devaluing a shareholder’s existing equity stake.
Formula: Diluted EPS = (Net Income – Preferred Dividends) / (Weighted Average Number of common
Shares Outstanding + Potential Additional Shares from Dilutive Securities)
3. Book Value per Share: Book value of equity per share effectively indicates a firm’s net asset value
(total assets – total liabilities) on a per-share basis.
Formula: Book Value per Share = (Total Shareholders’ Equity – Preferred Equity) / Total Common
Shares Outstanding
4. Dividend per Share: Dividend per share is the portion of a company’s earnings distributed to each
outstanding share of common stock as dividends.
Formula: Dividend per Share = Total Dividends Paid / Total Common Shares Outstanding
Per Share Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Basic EPS (Rs.) 55.85 56.09 80.74 47.59 53.43
Diluted Eps (Rs.) 55.81 56.03 80.65 47.53 53.43
Book Value[Excl. Reval Reserve] per 508.91 477.66 430.13 371.65 356.79
Share (Rs.)
Dividend/Share (Rs.) 24.00 22.00 36.00 18.00 18.00
Face Value 2 2 2 2 2
Margin Ratios:
1. Gross Profit Margin: Gross profit margin is an analytical metric expressed as a company’s net sales
minus the cost of goods sold.
Formula: Gross Profit Margin = (Gross Profit / Revenue) * 100
2. Operating Margin: The operating margin measures how much profit a company makes on a dollar of
sales after paying for variable costs of production, such as wages and raw materials, but before
paying interest or tax. Operating margin indicates the percentage of revenue remaining after covering
operating expenses.
Formula: Operating Margin = (Operating Income / Revenue) * 100
3. Net Profit Margin: Net profit margin represents the percentage of revenue that translates into net
income after all expenses.
Formula: Net Profit Margin = (Net Income / Revenue) * 100
Margin Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Gross Profit Margin (%) 12.06 12.54 14.59 11.70 12.59
Operating Margin (%) 10.82 11.38 13.19 10.46 11.38
Net Profit Margin (%) 7.10 7.80 15.46 8.10 9.10
Return Ratios:
1. Return on Net Worth/Equity (RONW/ROE): ROE measures the return generated on shareholder
equity. The higher the ROE, the better a company is at converting its equity financing into profits.
Formula: ROE = (Net Income / Shareholder’s Equity) * 100
Interpretation: Overall, the trend in RONE shows fluctuations over the years, with a notable increase in
2021 followed by some variation in subsequent years. From 2021 the RONE was continuously declined
for 2 years. This indicates a continued decline in the company’s ability to generate returns from its net
equity.
2. Return on Capital Employed (ROCE): ROCE help to understand how well a company is generating
profits from its capital as it is put to use. Higher ratios tend to indicate that companies are profitable.
Formula: ROCE = (Net Operating Profit / Capital Employed) * 100
3. Return on Assets (ROA): ROA provides how much profit a company is able to generate from its
assets.
Formula: ROA = (Net Income / Total Assets) * 100
Return Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Return on Net worth / Equity (%) 10.97 11.74 18.76 12.80 14.96
ROCE (%) 14.63 14.20 12.55 14.33 17.21
Return On Assets (%) 4.55 4.67 7.66 4.71 6.00

Liquidity Ratio:
1. Current Ratio: The current ratio compares all of a company’s current assets to its current liabilities.
The current ratio helps investors understand more about a company’s ability to cover its short-term
debt with its current assets and make apples-to-apples comparisons with its competitors and peers.
Formula: Current Ratio = Current Assets / Current Liabilities
2. Quick Ratio: The quick ratio measures a company’s capacity to pay its current liabilities without
needing to sell its inventory or obtain additional financing.
Formula: Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Liquidity Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Current Ratio (X) 1.37 1.39 1.46 1.18 1.30
Quick Ratio (X) 1.34 1.36 1.42 1.14 1.25
Leverage Ratio:
1. Debt to Equity Ratio: This ratio indicates how much debt a company is using to finance its assets
relative to the value of shareholders’ equity. Among similar companies, a higher D/E ratio suggests
more risk, while a particularly low one may indicate that a business is not taking advantage of debt
financing to expand.
Formula: Debt to Equity Ratio = Total Debt / Shareholders’ Equity
Interpretation: The trend in D/E ratio shows fluctuations over the years, with an increase in leverage in
2020 followed by a decrease in subsequent years. Presently the ratio is 0.25 which is less compared to
last 4 years, and suggests a relatively low level of debt compared to equity, indicating a conservative
financial structure.
2. Interest Coverage Ratio: The interest coverage ratio is a debt and profitability ratio used to determine
how easily a company can pay interest on its outstanding debt.
Formula: Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expense
Leverage Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Debt to Equity (x) 0.25 0.30 0.39 0.49 0.24
Interest Coverage Ratios (X) 6.27 7.22 4.00 3.81 5.24
Turnover Ratios:
1. Asset Turnover Ratio: Asset turnover is the ratio of total sales or revenue to average assets. This
metric helps investors understand how effectively companies are using their assets to generate sales.
Formula: Asset Turnover Ratio = Revenue / Average Total Assets
2. Inventory Turnover Ratio: Inventory turnover measures how efficiently a company uses its inventory
by dividing the cost of goods sold by the average inventory value during the period. A relatively low
inventory turnover ratio may be a sign of weak sales or excess inventory, while a higher ratio signals
strong sales but may also indicate inadequate inventory stocking.
Formula: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Turnover Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
Asset Turnover Ratio (%) 0.65 0.64 49.55 58.19 66.00
Inventory Turnover Ratio (X) 4.01 4.20 25.65 29.74 24.57
Valuation Ratios:
1. Price to Earnings (P/E) Ratio: The price-to-earnings (P/E) ratio is the proportion of a company’s
share price to its earnings per share. A high P/E ratio could mean that a company’s stock is
overvalued or that investors expect high growth rates.
Formula: P/E Ratio = Market Price per Share / Earnings per Share
Interpretation: The P/E ratio was continuously increased from 2021 this indicates continued investor
willingness to pay a premium for the company’s earnings. It also indicates heightened optimism about
future growth prospects, strong financial performance, or increased demand for the company’s stock.
2. Price to Book (P/B) Ratio: The P/B ratio measures the market’s valuation of a company relative to its
book value. A high P/B ratio suggests a stock could be overvalued, while a lower P/B ratio could
mean the stock is undervalued.
Formula: P/B Ratio = Market Price per Share / Book Value per Share
Interpretation: From 2021 the P/B ratio has increased continuously suggests that investors were willing
to pay a premium for the company’s assets, indicating optimism about future growth or strong
confidence in the company’s intrinsic value. A rising P/B ratio can also indicate improving financial
performance and profitability.
3. Enterprise Value to EBITDA (EV/EBITDA) Ratio: EV/EBITDA ratio measures a company’s
enterprise value relative to its EBITDA, providing a valuation benchmark. The EV/EBITDA ratio is
a popular metric used as a valuation tool to compare the value of a company, debt included, to the
company’s cash earnings less non-cash expenses. It’s ideal for analysts and investors looking to
compare companies within the same industry.
Formula: EV/EBITDA Ratio = Enterprise Value / EBITDA
Interpretation: The above graph shows continued increase in the company’s valuation relative to its
EBITDA from 2021. It could be due to various factors such as strong financial performance, strategic
initiatives, or investor expectations of future growth and profitability.
4. Price to Sales (P/S) Ratio: P/S ratio is a valuation ratio that compares a company’s stock price to its
revenues. It shows how much investors are willing to pay per dollar of sales for a stock.
Formula: P/S Ratio = Market Price per Share / Sales per Share
Valuation Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
P/E (x) 38.75 31.51 17.57 16.99 25.93
P/B (x) 4.25 3.70 3.30 2.17 3.88
EV/EBITDA (x) 23.84 20.69 20.49 14.01 19.15
P/S (x) 2.75 2.46 2.72 1.37 2.36
L&T demonstrates negative performance based on financial ratios. Earnings per Share (EPS) have
consistently decreased since 2021 from 80.74 to 55.85. Fluctuations in gross and net profit margins suggests
inconsistent profitability. The decrease in Debt to Equity ratio, indicating minimal reliance on debt.
Technical Analysis: Technical analysis is a trading discipline employed to evaluate investments and identify
trading opportunities by analysing statistical trends gathered from trading activity, such as price movement
and volume. Unlike fundamental analysis, which attempts to evaluate a security’s value based on business
results such as sales and earnings, technical analysis focuses on the study of price and volume.
Dow Theory: Technical analysis as we know it today was first introduced by Charles Dow and the Dow
Theory in the late 1800s. The Dow Theory is a technical framework that predicts the market is in an upward
trend if one of its averages advances above a previous important high, accompanied or followed by a similar
advance in another corresponding average. The theory is predicated on the notion that the market discounts
everything, consistent with the efficient market hypothesis.
The three trends are primary, secondary, and minor. The primary trend is the long-term trend, called a bull or
bear. Secondary trends are smaller trends, such as a market correction. Finally, minor trends are day-to-day
price fluctuations in the market.
Across the industry, there are hundreds of patterns and signals that have been developed by researchers to
support technical analysis trading. In general, technical analysts look at the following broad types of
indicators:
 Price trends
 Chart patterns
 Volume and momentum indicators
 Oscillators
 Moving averages
 Support and resistance levels
Trend Analysis: Trend analysis is a technique used in technical analysis that attempts to predict future stock
price movements based on recently observed trend data. Trend analysis uses historical data, such as price
movements and trade volume, to forecast the long-term direction of market sentiment.
Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will
happen in the future.
There are three main types of market trend for analysts to consider:
 Upward trend: An upward trend, also known as a bull market, is a sustained period of rising prices in
a particular security or market. Upward trends are generally seen as a sign of economic strength and
can be driven by factors such as strong demand, rising profits, and favourable economic conditions.
 Downward trend: A downward trend, also known as a bear market, is a sustained period of falling
prices in a particular security or market. Downward trends are generally seen as a sign of economic
weakness and can be driven by factors such as weak demand, declining profits, and unfavourable
economic conditions.
 Sideways trend: A sideways trend, also known as a rangebound market, is a period of relatively
stable prices in a particular security or market. Sideways trends can be characterized by a lack of
clear direction, with prices fluctuating within a relatively narrow range.
Close Price (Y)

4000
3500
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0
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4
-2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2
ar Apr Apr Apr ay ay Jun Jun -Jul -Jul -Jul ug ug Sep Sep Oct Oct Oct ov ov Dec Dec Jan Jan Jan Feb Feb ar ar
-M - - - -M -M 7- 0- 3 6 9 -A -A 6- 9- 2- 5- 8- -N -N 6- 9- 1- 4- 7- 9- 2- -M -M
21 03 16 29 12 25 0 2 0 1 2 11 24 0 1 0 1 2 10 23 0 1 0 1 2 0 2 06 19
Fig.1 1 Year closing price of L&T
The above chart shows that there is an increase in the stock prices of L&T over the past 1 year.
Close Price (Y) Linear (Close Price (Y))

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3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4
-2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2
ar Apr Apr Apr ay ay Jun Jun -Jul -Jul -Jul ug ug Sep Sep Oct Oct Oct ov ov Dec Dec Jan Jan Jan Feb Feb ar ar
-M - - - -M -M 7- 0- 3 6 9 -A -A 6- 9- 2- 5- 8- -N -N 6- 9- 1- 4- 7- 9- 2- -M -M
21 03 16 29 12 25 0 2 0 1 2 11 24 0 1 0 1 2 10 23 0 1 0 1 2 0 2 06 19
Fig. 2 Trend Line
Interpretation- The above graph shows the Upward Trend. On 18 Jan 2024 company reach it’s 52 weeks
high at price of Rs. 3634.50. L&T’s stock price has generally increased over the past year, though there have
been ups and downs. The price is currently near its 52-week high that is Rs. 3620.
Support & Resistance:

 ‘Support’ and ‘resistance’ are terms for two respective levels on a price chart that appear to limit the
market’s range of movement.
 The support level is where the price regularly stops falling and bounces back up, while the resistance
level is where the price normally stops rising and dips back down.
 The levels exist as a product of supply and demand – if there are more buyers than sellers, the price
could rise, and if there are more sellers than buyers, the price tends to fall.
 1st Support is at Rs. 2895 & 2nd Support is at Rs. 1809
 Resistance is at Rs. 3099.
Fig. 3 Support
Interpretation: The chart shows L&T’s support levels (S1, S2, S3) at ₹3420.00, ₹3309.00, and ₹3474.00
respectively. These are price points where the stock has bounced back in the past, potentially due to
increased buying.
Fig. 4 Resistance
Interpretation: The chart shows resistance levels (R1, R2, R3) at ₹3549.00, ₹3715.00, and ₹3400.00 for
L&T. These are price points where the stock price has struggled to rise in the past, possibly due to increased
selling pressure.
Moving Average:
 The moving average (MA) is a simple technical analysis tool that smooth’s out price data by creating
a constantly updated average price. The average is taken over a specific period of time, like 10 days,
20 minutes, 30 weeks, or any time period the trader chooses.
 Moving averages can be constructed in several different ways and employ different numbers of days
for the averaging interval. The most common applications of moving averages are to identify trend
direction and to determine support and resistance levels.
 The 7-day moving average calculates the average of the last 7 days’ closing prices.
4000
3500
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0
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4
-2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2
ar Apr Apr Apr ay ay Jun Jun Jun -Jul -Jul -Jul ug ug Sep Sep Sep Oct Oct ov ov ov Dec Dec Jan Jan Jan Feb Feb ar ar
-M - - - -M -M 1- 3- 5- 7 9 1 -A -A 5- 7- 9- 1- 3- -N -N -N 0- 2- 3- 5- 7- 8- 0- -M -M
21 02 14 26 08 20 0 1 2 0 1 3 12 24 0 1 2 1 2 04 16 28 1 2 0 1 2 0 2 03 15
Close Price (Y) Moving average (Close Price (Y))

Moving average (Close Price (Y)) Moving average (Close Price (Y))
Fig. 5. 7, 14 & 21 days Moving Average
Interpretation: The current price of a stock crosses above the 7, 14, and 21 days moving average, it indicates
that the stock’s short-term, medium-term, and longer-term trends are all moving upwards. This could
indicate positive momentum and potentially signal a bullish trend in the stock’s price.
4000
3500
3000
2500
2000
1500
1000
500
0
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4
-2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2 -2
ar Apr Apr Apr ay ay Jun Jun Jun -Jul -Jul -Jul ug ug Sep Sep Sep Oct Oct ov ov ov Dec Dec Jan Jan Jan Feb Feb ar ar
-M - - - -M -M 1- 3- 5- 7 9 1 -A -A 5- 7- 9- 1- 3- -N -N -N 0- 2- 3- 5- 7- 8- 0- -M -M
21 02 14 26 08 20 0 1 2 0 1 3 12 24 0 1 2 1 2 04 16 28 1 2 0 1 2 0 2 03 15
Close Price (Y) Moving average (Close Price (Y))

Moving average (Close Price (Y)) Moving average (Close Price (Y))
Fig. 6. 50, 100 & 200 days Moving Average
Interpretation: The above graph shows that the current price of the stock is higher than its average closing
prices over the last 50, 100, and 200 days. It suggests potential bullish momentum in the stock’s price
movement. The price touched the 50 days MA, we can use 100 days moving average as the support.
Relative Strength Index (RSI):

 The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures
the speed and magnitude of a security’s recent price changes to evaluate overvalued or undervalued
conditions in the price of that security.
 An asset is usually considered overbought when the RSI is above 70 and oversold when it is below
30.
 The RSI line crossing below the overbought line or above oversold line is often seen by traders as a
signal to buy or sell.
Date Closing Price Difference UP Down

01-Mar-24 3634.5
02-Mar-24 3654.3 19.8 19.8 0
04-Mar-24 3643.95 -10.35 0 10.35
05-Mar-24 3611.1 -32.85 0 32.85
06-Mar-24 3643.65 32.55 32.55 0
07-Mar-24 3676.7 33.05 33.05 0
11-Mar-24 3638.6 -38.1 0 38.1
12-Mar-24 3621.1 -17.5 0 17.5
13-Mar-24 3542.3 -78.8 0 78.8
14-Mar-24 3606.35 64.05 64.05 0
15-Mar-24 3535.4 -70.95 0 70.95
18-Mar-24 3557.2 21.8 21.8 0
19-Mar-24 3502.45 -54.75 0 54.75
20-Mar-24 3512 9.55 9.55 0
UP Average Down Average RSI

37.3476
13.9077 23.33077 6
Interpretation: An RSI (Relative Strength Index) value of 37.34 suggests that the stock is currently in a
slightly oversold territory. RSI is a momentum oscillator that measures the speed and change of price
movements, typically on a scale of 0 to 100. Readings below 30 often indicate oversold conditions,
potentially signalling a buying opportunity, while readings above 70 may suggest overbought conditions,
indicating a possible selling opportunity. Therefore, a value of 37.34 indicates that the stock’s price has
experienced some downward pressure, but it’s not extremely oversold.
Bollinger Band:
 A Bollinger Band is a technical analysis tool defined by a set of trend lines. They are plotted as two
standard deviations, both positively and negatively, away from a simple moving average (SMA) of a
security’s price.
 Three lines compose Bollinger Bands: A simple moving average, or the middle band, and an upper
and lower band.
 When the price continually touches the upper Bollinger Band, it can indicate an overbought signal.
 If the price continually touches the lower band it can indicate an oversold signal.
Fig. 7. Bollinger Band
Interpretation: The stock price is above the middle band of the Bollinger Bands, it indicates that the stock is
currently exhibiting upward momentum or bullish sentiment and the stock’s current price is higher than its
simple moving average over a specific period, typically 20 days.
Money Flow Index: MFI (Money Flow Index) in stock analysis measures the strength of money flowing in
and out of a stock, combining price and volume data over a specific period, typically 14 days. It ranges from
0 to 100, with high values indicating potential overbought conditions and low values signalling potential
oversold conditions.
Buy Date Price Quantity Sell Date Price Quantity Profit %
22/5/2023 2216.55 10
5/6/2023 2269.15 10 2.37%
1/11/2023 2894.35 20
12/11/2023 3052.6 20 5.47%
8/2/2024 3337.5 15
29/2/2024 3481.6 15 4.31%
Interpretation: The profit percentage in the table refers to the percentage gain between the buying price and
the selling price of a product. In this case, it’s for ten shares of a particular stock. For instance, the first line
shows a profit percentage of 2.37%. This means that the investor bought ten shares of a stock on 22/5/2023
for a total of Rs. 2216.55 and then sold them on 5/6/2023 for Rs. 2269.15, making a profit of Rs. 52.6 per
share. Overall, the table shows the profit percentage for three different trades.
In my course mini project, I have selected L&T. The reason being?

Answer:
 Impressive Order Book: As of September 2023, L&T has an astounding 72% year-over-year growth
in its order book, which is valued at ₹4.5 trillion, the highest it has ever been. This shows that there
is a significant market need for their services, particularly in the hydrocarbon industry, which is
fueling their impressive expansion.
 Robust Financial Results: L&T’s financial results are outstanding. It has generated revenue at a
compound annual growth rate (CAGR) of 10% and net profit at a rate of 39.3% during the last three
years. There have been notable advancements in both return on equity (ROE) and return on capital
employed (ROCE).
 Steady Stock Growth: Compared to the BSE Sensex benchmark index, L&T shares have increased at
a compound annual growth rate (CAGR) of 26.4% over the last thirty years. The company’s stability
and investor potential are reflected in the steady increase of its shares.
 Forward-Looking Initiatives: L&T has embraced the digital age by launching digital platforms like
L&T SuFin and L&T EduTech. These initiatives are poised to benefit from the global digitalization
trend. Additionally, the company’s foray into designing semiconductor chips is well-timed to address
the chip shortage issue.
Whether I wish to continue with the same company?
Answer: After reviewing the analysis, I want to stick with investing in L&T. Investing in L & T shares is a
great opportunity, as the company is at its stage of growth, which focuses on expanding the business further
and ensuring digital innovation and development. The growth-centric focus of the company towards cost
optimisation, digitisation and cost reduction can help the company to sustainable growth.
List 4 companies that you wish to invest into? If given 100%, how would you allocate all (in some
ratio)? Justify the ratio of investment.
With a budget of Rs. 1 Crore, I’d distribute my savings strategically.
 Hindustan Aeronautics Limited: I’d like to invest 20% in HAL. Because of its stability and
government support (HAL is one of the PSU’s,). HAL engages in the design, development,
manufacture, repair, overhaul, and upgrade of aircraft, helicopters, engines, avionics, and related
systems. Its diversified product portfolio reduces dependence on any single product or segment.
 Reliance Industries Limited (RIL): Like to invest 25%. RIL is one of India’s largest conglomerates,
with diversified businesses in petrochemicals, refining, retail, telecommunications, and digital
services.
 HDFC Bank: Like to invest 20%. HDFC Bank, a subsidiary of HDFC, is one of India’s largest
private sector banks, known for its extensive branch network, innovative products, and superior
customer service. HDFC’s presence across various financial services segments provides
diversification and reduces dependence on any single business line.
 Infosys Limited: Like to invest 20%. Infosys is a global leader in consulting, technology, and
outsourcing services, with a strong presence in the IT industry. Infosys has a history of robust
financial performance, with steady revenue growth, healthy profit margins, and strong cash flow
generation. This stability can be appealing to investors seeking consistent returns.
 L&T: And finally 15% in L&T. L&T is a prominent engineering and construction conglomerate in
India, with diversified businesses in infrastructure, manufacturing, and technology. A moderate
allocation to L&T offers exposure to infrastructure development and engineering expertise,
complementing other sectors in the portfolio.
Conclusion:
In conclusion, a combined fundamental and technical analysis suggests that L&T is a fundamentally sound
company with strong growth prospects and a diversified business portfolio. While stock price movements
may fluctuate in the short term due to market dynamics, the company’s solid financial footing, strategic
positioning, and management quality bode well for long-term investors. L&T appears to be a fundamentally
sound company with strong competitive advantages, diversified business operations, and growth
opportunities in India’s infrastructure and technology sectors. As a leading engineering and construction
conglomerate in India, it occupies a prominent position in key sectors such as infrastructure, manufacturing,
technology, and defence. After conducting a technical analysis of Larsen & Toubro (L&T), it can be
observed that the stock is currently exhibiting bullish momentum. Multiple technical indicators, such as
moving averages, relative strength index (RSI), and Bollinger Bands, suggest that the stock price is trending
upwards.

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FUNDAMENTAL AND TECHNICAL ANALYSIS OF L&T – MINI PROJECT

SCHOOL OF MANAGEMENT STUDIES AND RESEARCH

FUNDAMENTAL AND TECHNICAL ANALYSIS OF L&T -

Submitted To : Dr. Sagar Patil

1.1 Beta, r and r² Calculation

2.1 Economic Analysis

2.2 Industry Analysis

2.3 Company Analysis

2.4 Ratio Analysis

3.1 Trend Analysis

3.2 Support & Resistance

3.3 Moving Average

3.4 Relative Strength Index

3.5 Bollinger Band

3.6 Money Flow Index

4. Questions & Answers

LARSEN & TOUBRO LIMITED (L&T)

7. Minerals & Metals

Year Revenue From the data, we can see

NIFTY 58.65 67.37 95.83 Rapid Growth Stage

Basic EPS (Rs.) 55.85 56.09 80.74 47.59 53.43

Diluted Eps (Rs.) 55.81 56.03 80.65 47.53 53.43

Dividend/Share (Rs.) 24.00 22.00 36.00 18.00 18.00

Gross Profit Margin (%) 12.06 12.54 14.59 11.70 12.59

Operating Margin (%) 10.82 11.38 13.19 10.46 11.38

Net Profit Margin (%) 7.10 7.80 15.46 8.10 9.10

ROCE (%) 14.63 14.20 12.55 14.33 17.21

Return On Assets (%) 4.55 4.67 7.66 4.71 6.00

Current Ratio (X) 1.37 1.39 1.46 1.18 1.30

Quick Ratio (X) 1.34 1.36 1.42 1.14 1.25

Debt to Equity (x) 0.25 0.30 0.39 0.49 0.24

Interest Coverage Ratios (X) 6.27 7.22 4.00 3.81 5.24

Turnover Ratios Mar-23 Mar-22 Mar-21 Mar-20 Mar-19

Asset Turnover Ratio (%) 0.65 0.64 49.55 58.19 66.00

Inventory Turnover Ratio (X) 4.01 4.20 25.65 29.74 24.57

P/E (x) 38.75 31.51 17.57 16.99 25.93

P/B (x) 4.25 3.70 3.30 2.17 3.88

EV/EBITDA (x) 23.84 20.69 20.49 14.01 19.15

P/S (x) 2.75 2.46 2.72 1.37 2.36

Close Price (Y)

Fig.1 1 Year closing price of L&T

Close Price (Y) Linear (Close Price (Y))

Fig. 2 Trend Line

Support & Resistance:

Close Price (Y) Moving average (Close Price (Y))

Fig. 5. 7, 14 & 21 days Moving Average

Close Price (Y) Moving average (Close Price (Y))

Fig. 6. 50, 100 & 200 days Moving Average

Relative Strength Index (RSI):

Date Closing Price Difference UP Down

UP Average Down Average RSI

Fig. 7. Bollinger Band

In my course mini project, I have selected L&T. The reason being?

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