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L&T, BEML, Tata Power rise on Rs 2,580 crore deal with Defence Ministry

The Acquisition Wing, Ministry of Defence signed contracts with Bharat Earth Movers Ltd (BEML), Tata Power Company Ltd (TPCL), and Larsen & Toubro (L & T) on August 31.

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Larsen & Toubro | Tata Power | BEML

SI Reporter  |  New Delhi 

Following the sharp run-up, returns are expected to plateau.
L&T shares were also in focus after the company announced completion of the sale of its electrical and automation (E&A) business to Schneider Electric.

Shares of (L&T), Tata Power, and Bharat Earth Movers (BEML), gained on the BSE on Tuesday, a day after the Defence Ministry signed contracts with these companies worth Rs 2,580 crore to procure Pinaka rocket launchers for six Army regiments.

At 09:32 AM, L&T was trading over 1.7 per cent higher at Rs 961.65. It hit a high of Rs 965.95 in the opening deals. was trading over 2 per cent higher at Rs 60.05 while hit a high of Rs 699.95, up 4.5 per cent against Monday's close of Rs 669.2.

In comparison, the benchmark S&P BSE Sensex was trading nearly a per cent higher at 38,974.68 levels.

The Acquisition Wing, Ministry of Defence signed contracts with Bharat Earth Movers Ltd (BEML), Company Ltd (TPCL), and (L & T) on August 31, a statement from the ministry said.

The six Pinaka Regiments comprise 114 Launchers with automated gun aiming and positioning system (AGAPS) and 45 command posts to be procured from M/s TPCL and M/s L & T, and 330 vehicles to be procured from M/s CLICK HERE TO READ FULL REPORT

L&T shares were also in focus after the engineering conglomerate on Monday announced completion of the sale of its electrical and automation (E&A) business to Schneider Electric. The deal was first announced in May 2018. Valued at Rs 14,000 crore, it is one of L&T’s biggest divestment so far in value terms. READ MORE

"While we acknowledge current challenges in infra funding, sub-optimal returns led by cyclical challenges in E&C, Hyderabad Metro, NBFC, etc, L&Ts medium-term focus on making the business asset-light with high cash flow generation potential could drive a better

re-rating if executed well," analysts at Edelweiss Securities had said in a note issued on August 20.

Improving macros and domestic capital expenditure (capex) would be complementary. The extent of re-rating is also contingent on initiatives to reward stakeholders and improving the return profile, the brokerage added.

The brokerage has maintained a 'BUY/SO' rating on the stock with the target price of Rs 1,280.

First Published: Tue, September 01 2020. 09:44 IST
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