L&T Finance Holding, a subsidiary of
Larsen and Toubro, plunged on Wednesday after globalinvestment firm
Macquarie downgraded the company to underperform with target price
of Rs 53. 
Shares ofthe companyare trading at Rs
81.40, down Rs 3.65, or 4.29% at the Bombay Stock Exchange (BSE) on
Wednesday at 12:02 p.m.The scrip has touched an intra-day high of
Rs 85 and low of Rs 80.95. The total volume of shares traded at the
BSE is 485,599.In the earlier session, the shares climbed 0.12%, or
Rs 0.09, at Rs 85.05. Currently, the stock is trading down 16.38%
from its 52-week high of Rs 97.35 and above 101.73% over the
52-week low of Rs 40.35.
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Comments(1)
I agree with the views. L&T Finance shares were trading at a discount compared to the offer price, in the band of Rs 45 to Rs 50 for almost 2 years, considering the low PE levels. The shares spurted to abnormally high levels purely on the news of entering into banking business. As the statutory formalities to be complied for such ventures is a long drawn process and considering the fact that it has to compete in a competitive space with already established players in place, the valuation of its shares are highly overvalued. Even when we look at it as a potential banking company in future, we need to factor that Banking companies trade at low PE levels. On overall consideration of the above factors, it looks that the shares of L&T Finance are still overvalued and I expect the shares to come down and stabilize in the band of Rs 47 to Rs 52 in the short term.
Posted by Ram at 02/05/2013 06:39 Reply to this Report abuse