Scuttlebutt Fuels Larsen & Toubro

Larsen & Toubro (L&T) scrip hogged the limelight on the bourses today as rumours flew thick and fast. The stock closed at Rs 192.05 on the Bombay Stock Exchange clocking a volume of 51.32 lakh shares.

Apparently around 11.45 am, a large South-east Asian brokerage put out a report which stated that L&T had received a Rs 2,400 crore order for its EPC division from Russia, and, hence, it had a order backlog of about Rs 10,000 crore. However, the company denied the rumours to news agencies later during the day.

There were also rumours of a large industrial house and a European fund picking up a combined 80 per cent of the stock traded at the counter.

The stock had opened weak after rating agency Crisil downgraded L&T's bonds to AA+ from AAA, citing pressure on margins and delay in fund infusion into the company, but trimmed its losses on rumours.

The pending demerger of its cement division also fueled the upward swing.

However, market sources said that given that the company had recently held a board meeting on October 23 and there is no intimation of a meeting in the near future, it is unlikely that the demerger will happen shortly.

The rise in L&T stock was also fuelled by Cement Manufacturers Association (CMA) report, which said cement demand in India, the world's second-largest cement producer, is expected to grow by between seven to eight per cent in 2001-02 and prices will also improve due to rising demand.

CMA said the sector, which registered an average annual growth of 10 per cent between 1995 and 2000, declined by around 1.0 per cent in the past year to March.

"We expect cement demand to grow between seven and eight per cent for the current year after a fairly satisfactory rainfall," CMA president, T M M Nambiar told reporters.

Nambiar said demand was expected to increase on the hope that rural incomes would rise after a good monsoon and because of government initiatives in the infrastructure and road sectors.