Stock Shastra

Larsen & Toubro Ltd (L & T), is one of the leading engineering companies in India. Its largest revenue segment i.e. Engineering and Construction segment (E&C) provides Engineering, Procurement & Construction (EPC) solutions to all major engineering verticals. The company caters to industries like Power, Infrastructure, Hydrocarbons, Defense, Automation Process, etc offering a wide range of advanced solutions, services & products.

It is one of the most respected companies in the India’s private sector. L & T has had an impressive past clocking robust growth rates over the last 10 years. Also, it is well-placed to win orders from the growing Infrastructure & Power sector in India.

But, is it actually efficient?

I was analyzing the cement industry and realized for the first time what cyclicality means in its true sense. This industry posed a lot of challenges, it chew my head, made me study harder, and finally gave me a better understanding! I would like to share some of that wisdom and experience with all of you.

I analyzed some 12 companies from the cement industry which belong to BSE 500. I’m a value investor so I started by looking at the past 10 years growth rates. As I glanced through each company, I realized that there was a red patch (implying growth rates either negative or less than 10% YoY) and a green patch (implying growth rates in excess of 10% YoY) in a similar pattern. It became highly difficult for me to predict a future growth rate for the next ten years based on the past 10 year’s performance.

I then [...]