PCTE Group of Institutes,

Ludhiana
MBA- 2ND SEMESTER
CORPORATE FINANCE
206-18
PEER ANALYSIS PROJECT

TOPIC: LARSEN AND TOUBRO

NAME: ANSHUL GUPTA
UNIV.ROLL.NO: 2012873
OFFICIAL E-MAIL ADDRESS: anshulpctemba20a@gmail.com

TABLE OF CONTENTS:
Introduction of Company
Share Market Trend
Leverage
Ratios Comparison

Market Capitalization

Capital Structure

INTRODUCTION OF COMPANY:
Larsen & Toubro Limited, commonly known as L&T, is an Indian multinational
technology, engineering, construction, manufacturing and financial services
conglomerate headquartered in Mumbai, Maharashtra, India. It was founded by two
Danish engineers taking refuge in India. The company is also counted in the list of
world's top 5 construction companies. The company has business interests in basic
and heavy engineering, construction, realty, manufacturing of capital goods,
information technology, and financial services. As of 2020, L&T Group comprises
118 subsidiaries, 6 associates, 25 joint-venture and 35 joint operations companies.
SPML Infra Limited is a leading publicly listed infrastructure development
company that has managed and implemented over 600 projects across India on an
EPC (Engineering, Procurement and Construction), PPP (Public Private
Partnership) and BOOT (Build-Own- Operate-Transfer) basis.
SPML has over three decades of multidisciplinary experience in executing world
class infrastructure for water treatment and transmission, waste water handling,
treatment & recycling, solid waste management, power transmission & distribution
& civil infrastructure development.
SHARE MARKET TREND:

LEVERAGE: Leverage is an investment technique of using borrowed money,

precisely, the use of different financial instruments or borrowed capital to maximize
an investment's potential return. When a company, property, or investment is
referred to as "highly leveraged", that means the item has more debt than the equity.
LARSEN AND TOURBO:
FINANCIAL LEVERAGE:
 Larsen & Toubro's latest twelve months degree of financial leverage (dfl) is
1.32.
 Larsen & Toubro's degree of financial leverage (dfl) for fiscal years ending
March 2017 to 2021 averaged 1.18.
 Larsen & Toubro's operated at median degree of financial leverage (dfl) of
1.14 from fiscal years ending March 2017 to 2021.
 Looking back at the last five years, Larsen & Toubro's degree of financial
leverage (dfl) peaked in March 2021 at 1.32.
  Larsen & Toubro's degree of financial leverage (dfl) hit its five-year low in
March 2019 of 1.13.
 Larsen & Toubro's degree of financial leverage (dfl) decreased in 2017 (1.14,
-4.3%), 2018 (1.13, -0.6%) and 2019 (1.13, -0.0%) and increased in 2020
(1.20, +6.4%) and 2021 (1.32, +9.9%).
OPERATING LEVRAGE:
 Larsen & Toubro's latest twelve months degree of operating leverage (dol) is
0.15.
 Larsen & Toubro's degree of operating leverage (dol) for fiscal years ending
March 2017 to 2021 averaged 1.22.
 Larsen & Toubro's operated at median degree of operating leverage (dol) of
1.23 from fiscal years ending March 2017 to 2021.
 Looking back at the last five years, Larsen & Toubro's degree of operating
leverage (dol) peaked in March 2018 at 2.65.
 Larsen & Toubro's degree of operating leverage (dol) hit its five-year low in
March 2021 of 0.15.
 Larsen & Toubro's degree of operating leverage (dol) decreased in 2019 (1.23,
-53.6%), 2020 (0.73, -40.8%) and 2021 (0.15, -78.8%) and increased in 2017
(1.32, -498.5%) and 2018 (2.65, +101.4%).
COMBINED LEVERAGE:
 Larsen & Toubro's latest twelve months degree of combined leverage (dcl) is
0.20.
 Larsen & Toubro's degree of combined leverage (dcl) for fiscal years ending
March 2017 to 2021 averaged 1.39.
 Larsen & Toubro's operated at median degree of combined leverage (dcl) of
1.39 from fiscal years ending March 2017 to 2021.
 Looking back at the last five years, Larsen & Toubro's degree of combined
leverage (dcl) peaked in March 2018 at 2.99.
 Larsen & Toubro's degree of combined leverage (dcl) hit its five-year low in
March 2021 of 0.20.
  Larsen & Toubro's degree of combined leverage (dcl) decreased in 2019
(1.39, -53.6%), 2020 (0.87, -37.0%) and 2021 (0.20, -76.7%) and increased in
2017 (1.50, -481.6%) and 2018 (2.99, +100.1%).

SPML INFRA LIMITED:

FINANCIAL LEVERAGE:
 SPML Infra's latest twelve months degree of financial leverage (dfl) is 0.32.

 SPML Infra's degree of financial leverage (dfl) for fiscal years ending March
2016 to 2020 averaged -16.33.

 SPML Infra's operated at median degree of financial leverage (dfl) of -3.63

from fiscal years ending March 2016 to 2020.

 Looking back at the last five years, SPML Infra's degree of financial leverage
(dfl) peaked in December 2020 at 0.32.

 SPML Infra's degree of financial leverage (dfl) hit its five-year low in March
2019 of -60.15.

 SPML Infra's degree of financial leverage (dfl) decreased in 2016 (-3.63,

+68.1%), 2018 (-15.57, +1,027.2%) and 2019 (-60.15, +286.3%) and
increased in 2017 (-1.38, -62.0%) and 2020 (-0.91, -98.5%).

OPERATING LEVERAGE:
 SPML Infra's latest twelve months degree of operating leverage (dol) is 2.47.

 SPML Infra's degree of operating leverage (dol) for fiscal years ending March
2016 to 2020 averaged 2.59.
  SPML Infra's operated at median degree of operating leverage (dol) of 2.62
from fiscal years ending March 2016 to 2020.

 Looking back at the last five years, SPML Infra's degree of operating leverage
(dol) peaked in March 2019 at 11.35.

 SPML Infra's degree of operating leverage (dol) hit its five-year low in March
2018 of -3.29.

 SPML Infra's degree of operating leverage (dol) decreased in 2016 (2.62, -

16.7%), 2017 (-1.21, -146.3%), 2018 (-3.29, +170.8%) and 2020 (3.47, -
69.4%) and increased in 2019 (11.35, -445.5%).

COMBINED LEVERAGE:
 SPML Infra's latest twelve months degree of combined leverage (dcl) is 0.80.

 SPML Infra's degree of combined leverage (dcl) for fiscal years ending March
2016 to 2020 averaged -128.56.

 SPML Infra's operated at median degree of combined leverage (dcl) of -3.16

from fiscal years ending March 2016 to 2020.

 Looking back at the last five years, SPML Infra's degree of combined leverage
(dcl) peaked in March 2018 at 51.17.

 SPML Infra's degree of combined leverage (dcl) hit its five-year low in March
2019 of -682.94.

 SPML Infra's degree of combined leverage (dcl) decreased in 2016 (-9.53,

+40.0%) and 2019 (-682.94, -1,434.5%) and increased in 2017 (1.68, -
 117.6%), 2018 (51.17, +2,951.9%) and 2020 (-3.16, -99.5%).
RATIO COMPARISON:
RATIOS LARSEN AND TOUBRO SPML INFRA LIMITED
CURRENT RATIO 1.26 1.05
EPS 68.04 1.80
RETURN ON CAPITAL 9.93% 14.71%
DEBT EQUITY RATIO 2.11 3.89
INTEREST COVERAGE 5.80 1.16
RATIO

MARKET CAPITALIZATION:
Larsen and Toubro has market capitalization of nearly 2.13 lakh crore where on the
other side SPML infra limited has market capitalization of nearly 43.21 crore.

CAPITAL STRUCTURE:

As we can see Capital Structure of both the companies, Larsen and Toubro is
40.8% financed by shareholders fund whereas SPML infra limited is 14.35%
financed by shareholders fund. So we can say that SPML infra limited has more
shareholders fund as compared to Larsen and Toubro.
SOURCE OF INFORMATION:
https://www.moneycontrol.com/financials/larsentoubro/balance-
sheetVI/LT
https://www.larsentoubro.com/
https://www.moneycontrol.com/financials/spmlinfra/consolidated-
ratiosVI/SPM05#SPM05
http://www.spml.co.in/
https://www.moneycontrol.com/india/stockpricequote/
constructioncontracting-civil/spmlinfra/SPM05
https://www.moneycontrol.com/india/stockpricequote/
infrastructure-general/larsentoubro/LT