Slow and Stead Group

BY:
Hemant
Nurshid
 Fact of the Case study
Investor: Mr. Alok Kumar, 35yrs
Occupation: Private employee
Earnings: Alok + his wife (15+6) lakhs=21lacs. P.a.
Personal information: Married with 2daughters( 5yrs & 3yrs old respectively), and dependent parents.
Existing Portfolio:15lacs in Mutual fund, 1.5lacs in Debt fund(maturity of 2yrs), 8lacs Fixed deposit, 6lacs
Gold ornaments, 10,000 as Life insurance premium.
Assets: Owned house, 2 cars( Honda civic, santro)
Liabilities:
Home loan of Rs. 30,000 p.m. go on for next 10yrs.
Car loan of Rs. 12,000 p.m. go on for next 2yrs.
Assumption:
max life time of wage earner 70 year
Retirement 60 year
 Risk Profile
 Risk Capacity:- High
 Risk Behavior:- High to moderate
 Cash Flows of Mr. Alok Family
OUT FLOWS:-
• Parent s expenses 15000*12 (assume)
• Daughter education 15000*12 (assume)
• Car maintenance 15000*12 (assume)
• House hold expenses 15000*12 (assume)
• L I premium 10000
• Car (E M I) 12000*12 (2 year)
• Home loan 30000*12 (10 year)
• Travelling expenses 300000
• Total 15 24000
• Present investable amount 5, 75,000
• After2 year investable amount 7,19,000
 Investment Objective
 Fund for Daughter marriage( about 60lacs).
 Provision for retirement purpose.(30,000 *12)
 Fund for medical treatment of family.
 Travelling & other expenses after retirement
5,00,000 for last 10 year.
 Assets Allocation
Assets Allocation
 Equity: 50%
 Debt: 20%
 Insurance: 20% Equity
Debt
 MF: 10% Insurance
MF
 Allocation of Equity fund
• Equity of L&T for long Term 70%.
• Equity of Hul & Dabur 30%.
 Allocation of Debt fund
 Bond of L&T 50%.
 NHAI bond 30%.
 KVP 20%
 Allocation of MF
• SBI magnum fund 50%.
• Birla sunlife index fund 50%.
 Allocation of Insurance fund
 ICIC lombard family floater plan20%.
 Lic of Mrs. Alok80%.
 FUNDAMENTAL ANALYSIS
 ECONOMIC ANALYSIS
 INDUSTRY ANALYSIS
 COUNTRY ANALYSIS
 INDUSTRY ANALYSIS
• After analyzing the top growing industry, we, as a
financial planner found that Construction industry
is the best option for Mr. Alok to invest in.
• We analyzed this sector on the following basis:
 Growth rate of this industry.
 Huge flow of FDI & FII flows.
 High demand.
 Economic growth, etc.
COPARAISION OF DIFFERENT
COMPANY ON THE BASIS OF
DIFFERENT RATIO
RTATIO L&T DLF H CC GAMMON PUNJ
LLYOD

P/E RATIO(%) 25.89 84.83 23.22 22.36 12.23

E P S (Rs) 72.66 4.51 2.69 9.39 11.06

D P S (Rs) 12.5 2 .80 .60 .15

N P (%) 11.18 NOT 2.22 2.77 4.87

AVIALABLE

RETURN ON NET 23.92 5.96 5.36 6.21 10.27

WORTH(%)

RETURN ON CAPITAL 25.42 7.02 9.24 10.38 9.55

EMPLOYED(%)

DEBT EQOITY RATIO .37 .99 1.66 .67 .98

BOOK VALUE(Rs) 303.66 75.59 50.03 151.02 107.71

CURRENT MARKET 1917.95 382.60 60.75 210 135.35

 Why Construction Industry?
• The budget 2010-11 addressed infrastructure sector. The Finance Minister has announced Rs 10,000
crores allocation towards Indira Awaas Yojna and Rs 48000 crores towards Bharat Nirman.
• Allocation for infrastructure projects for the ensuing fiscal will be Rs.173,552 crore ($38.5 billion)
• Allocation for Road Transport was raised by over 13% to Rs19,894 crore.The programme aims at
developing 50,000 km of national highways in seven phases by 2015 with an investment of over Rs.
3,000 billion at 2007 prices & nearly 60% of the future funding requirements of the NHDP Rs.
3,014.88 billion till 2015 are expected to come from the private sector.
• In the construction equipment sector before slowdown it grew at35% but now it boost up about 18-
25%
• In urban infra sector govt. has allocated Rs. 11,842 crore under the Jawaharlal Nehru National Urban
Renewal Mission (JNNURM) & also set aside Rs. 40,900 crore for 2009–10 for its Bharat Nirman
initiative for housing, rural roads, power, irrigation, telephony, and drinking water supply.
• Commercial and office complexes mushrooming in major Indian metros.
• Over 25 million new housing units required in 7years,etc.\
• UPA government has planned to build 20km of national highways a day to increase its network.
• Country at present has about 70,000km of national highways which is only about two per cent of
total over 33 lakh km of road network.
 COMPANY ANALYSIS
It is final stage in Fundamental analysis. It is
being done in two parts:
 How the company performed in comparison
to other company operating in similar field?
 How company performed in comparison to
earlier year?
 L & T PROFILE
• Larsen & Toubro Limited (L&T) is a technology, engineering, construction
and manufacturing company.
• Engineering Construction and Contracts Division of L&T is India’s largest
construction organization with over 60 years of experience and expertise
in the field
• ranks 35th among top global contractors and 60th among international
contractors as per survey Engineering News Record magazine USA
• L&T Infra quickly achieved cumulative approvals of Rs 17,133 crores and
cumulative disbursements of Rs 7,615 crores across Energy
• A.M. Naik- Chairman & Managing Director
• Y.M. Deosthalee- Time Director & Chief Financial Officer
• K. Venkataramanan- Director & President (Engineering & Construction
Projects)
 L & T PROJECT
 On 8th oct 2010, L&T bags new order worth Rs 1585 from Building & Factory
segments.
 On 30th sep 2010, L&T bags Rs 700cr. Order from water & material handling
sector.
 27th sep 2010, The co. wins Rs. 1610 cr. Order from visa power ltd. For 1200 mw
power plant.
 Lube based oil project for petronas melka refinery in Malysia.
 700 TPD methonol and 100 TPD co. plant construction.
 1025 crore project for construction of hospital and residential project in Mumbai.
 Heavy lift cum pipelay vessel project.
 NQ-re construction (NQRC) project in Mumbai high north field.
 9 well platform project.
 23rd Aug2010, the co. bags Rs. 1195 cr. ONGC order.
 5th Aug 2010, the co. bags 1749 cr. Order from metallurgical sector.
 Comparison with earlier year
Ratio March 09 march10

P/E RATIO(%) 10.95 25.89

E P S (Rs) 59.49 72.66

10.5 12.5
Dividend Per Share(Rs)
Net Profit Margin(%) 10.06 11.18

Return On Net Worth (%) 27.99 23.92

Return On Capital Employed(%) 24.14 25.42

Debt equity ratio(%) 53 37

Book Value(Rs) 212.32 303.66

 TECHNICAL ANALYSIS
• Technical analysis refers to study market
generated data like prices & volume to
determine the future direction of price
movement.
L & T LINIER CHART
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an/ an/ eb/ ar/ ar/ pr/ pr/ ay/ ay/ un/ un/ Jul/ Jul/ Jul/ ug/ ug/ ep/ ep/ ct/ ct/ ov/ ov/ ec/ ec/ an/ an/ eb/ eb/ ar/ ar/ pr/ pr/ ay/ ay/ un/ un/ Jul/ Jul/ ug/ ug/ ug/ ep/
/J /J /F M M /A /A M M /J /J 1/ 5/ 9/ /A /A /S /S /O /O /N /N /D /D /J /J /F /F M M /A /A M M /J /J 5/ 9/ /A /A /A /S
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L & T SHORT AND LONG TERM
MOVING AVERAGE
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a a a a a a a p p p p p p p a a a a a a a
/Ja /Ja /Fe /Fe /Fe /Fe /Fe /Fe /Fe M M M M M M M /A /A /A /A /A /A /A M M M M M M M /Ju /Ju /Ju /Ju /Ju /Ju /Ju
2 1 27 0 1 04 0 8 11 17 2 2 25 03 / 0 8 / 1 1 / 16 / 1 9 / 25 / 3 0 / 05 08 13 1 9 22 27 3 0 05 / 1 0 / 13 / 1 8 / 2 1 / 26 / 3 1 / 03 0 8 11 1 6 21 24 2 9

closing price 200days average 10 Days AVG

 TAXATION BENEFIT
• Taxation benefit upto 250000 on house loan.
• Taxation benefit uto Rs 16750 on health
insurtance.
• Taxation benefit on li premium of Rs. 10000.