L&T stock price surges over 6% ahead of board meet to consider share buyback; should you buy stock?

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Updated: August 20, 2018 10:53:20 AM

L&T stock price: Larsen and Toubro (L&T) share price climbed over 6% during morning trade deals on Monday ahead of its board meeting later this week where it will consider a proposal for buyback of equity shares of the company.

larsen toubro, L&T, dhaka metro, larsen and toubro contact, larsen toubro construction, bangladeshL&T stock price: L&T share price climbed over 6% during morning trade deals on Monday.

L&T stock price: Larsen and Toubro (L&T) share price climbed over 6% during morning trade deals on Monday ahead of its board meeting later this week. The engineering and construction major on Saturday informed the stock exchanges that it will consider a proposal for buyback of equity shares of the company in a board meeting to be held on August 23. On the BSE, L&T share price rose 6.4% to Rs 1,319.65 in mid-morning trade. L&T shares edged higher by 6.43% on the National Stock Exchange to Rs 1,319.95 per share.

On Saturday, Larsen and Toubro informed the stock exchanges that it will consider a proposal for buyback of equity shares of the company which will be taken up by the company in a board meeting to be held on August 23 (Thursday). However, the company did not share details of the buyback offer. The regulatory filing added that the trading window for dealing in the securities of the company will be closed for the company’s directors/officers and designated employees from Monday (August 20) till Friday (August 24) as per the firm’s internal code for prevention of insider trading.

What brokerages say

Macquarie has seen an opportunity for investors to accumulate L&T post recent correction and maintained “outperform” on L&T stock with a target price of Rs 1,825. According to Macquarie, L&T is in a position to launch a buyback of up to $1 billion. Buyback decision drives short-term price action but also gives confidence in the outlook, said Macquarie.

Morgan Stanley said that if approved by the board, this will be L&T’s first buyback. The buyback could be taken by the market as a signal of an alternative to reward shareholders. Morgan Stanley has rated L&T stock as “overweight” with a price target of Rs 1,786. Morgan Stanley analysts believe that buyback is “over and above the regular dividend and is tax efficient from a shareholder perspective”.

According to IIFL Institutional Equities (IIFL), the newsflow of L&T buyback is positive for investors. IIFL said that it is positive on L&T given healthy orderbook and execution pace, and does not see L&T buyback as negative for long term.

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