L and T's investment plans find favor

Thu, 3 Dec 02:30 pm

   Previous Close   

   Pre-Open   

   10:30 am   

   12:30 pm   

   Closing   

The Indian markets traded in a range during the previous two hours of trade on the back of sustained buying activity in the index heavyweights. Buying was especially evident in stocks from the energy, metals and realty spaces. The overall market breadth is positive with the advance to decline ratio poised at 2.1 to 1 on the BSE.

The BSE Sensex and NSE Nifty are currently trading in the positive, up by 120 and 35 points respectively. The BSE-Midcap and BSE-Smallcap are also trading firm, up by around 0.8% and 1.5% respectively. The rupee is trading at 46.14 to the dollar.

Indian engineering and power sector conglomerate, L&T is planning to increase its power generation capacity to 7,000 MW in the near future. To this end, it will undertake power generation projects to amass a capacity of 5,000 MW thermal power and 2,000 MW hydel power in the next 5 years. It may be noted that the company has a 1,320 MW thermal power plant in Punjab and a 300 MW hydel power plant in the North East.

However, while the company bets big on prospects of the Indian power sector, it also aims to grow its IT business at a faster rate. It is eyeing small and medium sized acquisitions for the same. It also aims at excelling in complex engineering works and plans to manufacture new products in the precision and line engineering segment from its new facility in Coimbatore. The company has already committed an investment of Rs 40 bn in ports, shipyard and highway projects in the state of Tamil Nadu which has so far been its favorite investment destination. The stock is trading in the green.

According to a leading daily, Pantaloon Retail India, the country's largest listed retail chain, is planning to invest Rs 3.6 bn during the rest of this fiscal. This investment aims at adding another 2.4 m sq ft of retail space to its existing operations. It may be noted that the company begins its financial year in July. So the above mentioned investment is expected to happen in the next 7 to 8 months. This will be reflected in Pantaloon's balance sheet itself and not in its subsidiaries. Pantaloon Retail is also planning to hive-off its value retail chain i.e. Big Bazaar into a separate subsidiary. It plans to open 155 Big Bazaar stores by 2014 taking the total network size to 275 stores. The company has hinted of raising money through Pantaloon's IPO for the same. It also raised Rs 5 bn through QIP last week in order to fund its plans for expansion and debt reduction. Currently, Pantaloon is trading in the negative.