FIIs stake in L&T at six-year high

FIIs increased their stake by nearly 3% to 17.85% in December against 15.25% at the end of September quarter.

Foreign institutional investors (FIIs) in buying mode of Larsen and Toubro (L&T) stock with their holding in engineering major has touched six year high.

The overseas investors have picked up an additional nearly 3% stake in October-December 2013, taking their holding to 17.85% of the capital. FIIs have purchased an additional 24.2 million shares of L&T in December quarter after reported a better than expected results for the quarter ended September.

Current FIIs holding in the company is highest since December 2007, according to shareholding data available with Bombay Stock Exchange (BSE).  The overseas investors 2.6% stake purchased in last quarter is highest since June 2009 quarter.

Earlier in past three quarters, FIIs had reduced their stake in the company by 1.48% from 16.73% in December 2012 to 15.25% at the end of September quarter.

Government of Singapore and Abu Dhabi Investment Authority are among the major buyers, acquired more than 1% stake in L&T against nil holding in previous quarter.

However, total holdings of domestic institutional investors (DIIs) in the company have declined to 36.61% from 37.36% during the quarter.

L&T stock has reacted sharply by surging 23% since September compared to 7% rise in benchmark S&P BSE Sensex.

Meanwhile, analyst expects L&T to post around 10% year-on-year (YoY) growth in sales in October-December quarter, owing to a large order book and robust order inflows in the past couple of quarters.

On the EBITDA front, we expect the company's margin to witness an expansion of 44bp yoy to 10.0%, says analyst at Angel Broking in 3QFY2014 results preview.

We estimate the company's order inflow to be at around Rs 25,000 crore for the quarter, which is in line with the Management's guidance of 15-20% growth in order book for the full year, he adds.