L & T Finance Holdings recovers to Rs 70 & up 44% from Low of Rs 48.30 on February 12,2016….that’s inside Two Months…it also trades in the F & O Segment
It opened 2016 at Rs 65 when Sensex levels were at 27500 + and closed January 2016 at Rs 58 only to drop sharply below Rs 50 to Rs 48.30 on February 12,2016 and in fact closed February 2016 at Rs 52
Today it’s up to Rs 70 on a day when RBI has dropped Repo Rate to 6.50% ~ cut of 0.25% as expected by the markets & therefore priced in earlier.The Sensex post Noon & announcement of repo rate cut has corrected over 330 points and is below 25100 currently but L & T Finance is up 7.4% to Rs 70 !
Have always had a soft corner for L & T Group even when they’re in soft times & in midst of controversies like just two years ago in mid March 2014 when it was introduced for trading in the F & O Segment in mid month just when parent Larsen & Toubro offered a stake through OFS on the Stock Exchange Window at a Floor Price of just Rs 70 on SEBI allowing this route even though they had sold shares in the prior six months.The F & O trading pattern a day or two before showed insiders ( who must have known lower floor price before hand) short selling at Rs 85 levels & SEBI investigation revealed parties who had never before ever done F & O having indulged in it to make several Crores of Profit
Had been disappointed with L & T Finance Holding’s inability to leverage strongly on the parent L & T Brand in their Finance Foray….This Listed Company should have been over Rs 200 by now inside 5 years after it’s IPO at Rs 52 in mid 2011….Had recommended it strongly in 2011 & saw it’s price move smartly to Rs 95+ Highs in 2012 & 2013 only to slide back….then had recommended exit as was not enamored with top management who always wore a bored & disinterested look at analyst meets
Then came in Bain Capital in September 2015 to stir the shareholding in the company by picking a preferential post issue stake of 5.27% through an aggregate of 95.66 m shares & warrants ( to be exercised from six to eighteen months from allotment) @ Rs 74.This would infuse over Rs 700 crs into the Company.It also created another Rs 600 cr exposure through a 4.95 % post issue stake by buying 85.2 m shares from parent Larsen & Toubro in market deals at @ Rs 70…the Sensex at the time was @ 26200 levels with the Share Price of L & T Finance Holdings in the Rs 67 to Rs 70 range
Looks like Bain’s getting in the Gains !…it’s exposure on full dilution will be Rs 1300 crs+ at Rs 70 to Rs 74…..if price doubles to Rs 150 in 3 or 4 years then CAGR would be 30% & 20% respectively….Do remember however that since listing in the second half of 2011,L & T Finance has never crossed Rs 100 !
Looking Good for L & T Finance Holdings Shareholders …I’m not one of them as of now
PS : I am told there is a clean sweep process on in the management and many have been shown the exit door for non performance