MOSL: LARSEN & TOUBRO (Buy)-Divests E&A business to Schneider Electric for INR140b; In line with L&T’s ‘Lakshya’ programme
LARSEN & TOUBRO: Divests E&A business to Schneider Electric for INR140b; In line with L&T’s ‘Lakshya’ programme to divest non-core assets
(LT IN, Mkt Cap USD29.7b, CMP INR1400, TP INR1690, 21% Upside, Buy)
- L&T signs agreement with Schneider Electric for sale of its Electrical & Automation segment. L&T has entered into a definitive agreement with Schneider Electric (India) Private Limited and Schneider Electric JV Holdings Limited for a divestment of its Electrical and Automation (E&A) segment for a cash consideration of INR140b. The deal does not include the marine switchgear and Servowatch Systems (primarily into marine automation) in the E&A segment. The deal is expected to close in 18 months from the date of signing of the agreement (1st May, 2018) and is subject to receipt of the required regulatory approvals. The E&A segment accounted for ~4-5% of consolidated sales in FY18e and ~6% of consolidated EBITDA (See Exhibit 1 for detailed P/L of the E&A segment). The E&A segment is a debt free business with strong cash flow generation and EBITDA margins in the 14-15% margin range
- E&A segment primarily into switchgears and automation products; amongst the largest player in LV switchgear in India. The E&A business comprises two strategic Business Groups (SBGs) – Products SBG and Projects SBG and offers a wide range of low and medium voltage switchgear, electrical systems, marine switchgear, industrial/ building automation solutions and metering solutions. Its key competitors include ABB, Siemens, Legrand, HPL Electric and Havells India. Its manufacturing facilities are located at Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysore in India as well as in Saudi Arabia, UAE, Kuwait, Malaysia, Indonesia and the UK.
Larsen and Toubro is engaged in the following business segments: Engineering & Construction; Electrical & Electronics; Machinery & Industrial Products; and Other. Engineering and construction segment comprises execution of construction projects in civil, mechanical and electrical engineering. Electrical and electronics segment comprises the manufacture and sale of switchgear, petroleum dispensing pumps, and medical equipment. Machinery and industrial products segment comprises the manufacture and sale of industrial machinery and equipment. Other segment includes property and software development, generation of power for consumption by Haldia Petrochemicals Limited, and financial services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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