L&T gains 5% on hopes of winning defence contracts worth Rs 40,000 crore

Shares of Larsen & Toubro rallied nearly 5% in an otherwise flat market following news reports that the company is hopeful of bagging some six defence contracts amounting to Rs 40,000 crore.

The stock gained as much as 4.83% to Rs 1,181 in intraday trade on the BSE. The stock was the top gainer on Semsex and Nifty.

The counter has seen huge trading activities with a combined 2.9 million shares exchanging hands on NSE and BSE so far. On an average a combined 1.3 million shares were traded daily in the past two weeks on both the exchanges.

"The way government is moving with its defence policies, clearing and finalising the Strategic Partnership Policy and integrating it with the new Defence Procurement Procedure is appreciable, said Jayant D Patil, Whole-time Director and Senior Executive Vice-President (Defence Business), L&T as reported The Hindu Businessline.

The momentum should not be lost, for getting to initial operational capability will take additional time, he added.

In an earlier report, Patil pointed out that India’s new defence purchase policy that allows non-state local firms to compete for orders from the military is helping L&T to become more ambitious.

The company is building on its success with a $700-million order for artillery guns in May, unprecedented in size for a local contractor, he said.

Meanwhile, on Saturday, the company informed bourses that its arm L&T Infrastructure Development Projects (L&T IDPL) has proposed to set up an infrastructure investment trust.

In this regard, an application for registration of the InvIT as an infrastructure investment trust was filed by L&T IDPL with Securities and Exchange Board of India (Sebi) on Friday, it said.

Brokerage Motilal Oswal Securities maintained 'buy' rating on the stock with an SOTP based price target of Rs 1, 340 per share as it believes it is an attractive play on a recovery in industrial and infrastructure capex in India.

Larsen & Toubro Limited