Each student is required to complete a 5-10 page Term Paper on a public Company.The Term Paper must...

Question

Each student is required to complete a 5-10 page Term Paper on a public Company.

The Term Paper must include the following and support your calculations by stating your assumptions:

1. Provide sources of your information and bibliography.

2. An Introduction and Overview of the Company.

3. Describe the Industry and Competition. Where is the Company in the industry?

4. State whether the Company is Mature, Growing, or Declining and support your statement.

5. Conduct a Financial Analysis of the Company using the Company’s latest financial statements. The financial analysis should state the trend (increasing, decreasing, flat) of the last two years and the reasons for the year-to-year changes. The financial analysis should utilize appropriate financial ratios for your Company.

6. Calculate the Company’s Weighted Average Cost of Capital (“WACC”).

7. Provide at least five years of Free Cash Flow Projections for the Company to be used to determine and calculate the intrinsic value of the Company.

8. Calculate the Valuation of the Company using your Free Cash Flow projections and the Weighted Average Cost of Capital.

9. Determine the Market Value of the Company and provide commentary on the Market Value versus your Intrinsic Valuation Calculation of the Company.

10. Identify a new growth product that does not currently exist in the Company’s portfolio of products that would potentially increase the shareholder value of the Company.

11. Provide a Conclusion of your analysis including commentary as an investor are you a Buyer, Seller, or Hold (if you currently hold the Company’s security).

Harshit · Accepted Answer

TERM PAPER ON LARSEN &TUBRO
INTRODUCTION AND OVERVIEW OF THE COMPANY
Larsen & Tubro is a public company whose headquarters are located at Mumbai. The company is mainly engaged in manufacturing of capital goods, realty, construction, heavy engineering and financial services. It has 25 joint ventures, 6 associates and 118 subsidiaries. The company is also interest in power transmission and distribution services, transportation infrastructure, Metallurgical and material handling services, heavy civil infrastructure and water and effluent treatment. 
The company is traded in the National Stock Exchange with the name LT. The company is currently trading at Rs. 1273. It’s subsidiaries are L&T technology services, LTI, Mindtree and many more.
INDUSTRY AND COMPETITORS
Larsen & Tubro largely belongs to the construction industry therefore it’s main competitor is Shapoorji Pallonji & Co. Pvt. Ltd. for this sector (i.e. buildings). Other competitors such as the Simplex, GDC, etc. are not doing well due to market slow down in recent times. 
In the infrastructure industry also the company has many active competitors and even more than the construction industry. Main competitors of the company are Simplex Infra, HCC, Afcons, etc. Due to market slow down Gammon is not working upto the mark. 
The company in the electrical and automation sector also plays a major role. It also improves efficiency and minimizes human intervention which is the need of the hour in the current era of technology-driven environment. It’s main competitors in this sector are Siemens, Honeywell automation, ABB Ltd., Rockwell automation, Adage automation Pvt. Ltd., Titan automation control, Codillac Automation Control, etc. 
L&T also provides turnkey solutions power distribution and water turnkey treatment.
L&T’S POSITION IN THE PRODUCT LIFE-CYCLE
In the automative industry where the company is involved in software digital and platform engineering, manufacturing and plant/process engineering and product engineering it is the leader in the industry according to the ratings.
In the chemicals and oil gas industry where the company is involved in software digital and platform engineering and manufacturing and plant/process engineering it is the leader according to the ratings provided in the sector.
On the other hand, L&T’s technology services are increasing day by day with increase in the number from 164 to 220 in 2017-18 and also the students who registered for the program increased to 9000+ in the year 2017-18.
Therefore, it seems that the company is now at the growing stages and about to touch the maturity phase.
FINANCIAL ANALYSIS OF THE COMPANY
1. LIQUIDITY RATIOS:
(A) Current ratio: This ratio can be calculated by dividing the current assets by the current liabilities of the company. It is generally a working capital ratio which assess the company’s ability to meet it’s obligations which are short term in nature generally due within a year. It is also a measure of financial health of a company.
	PARTICULARS
	2019
	2020
	 
	₹ in crore
	₹ in crore
	Current assets
	108227.04
	113916.34
	Current liabilities
	99051.97
	107667.9
	Current ratio 
	1.0926288
	1.0580344
(B) Acid-test ratio: This ratio is calculated by dividing the excess of currents assets to inventory by the current liabilities of the company. This is more stringent ratio than the current ratio, to measure the company’s ability to meet its obligations in the near future.
	PARTICULARS
	2019
	2020
	 
	₹ in crore
	₹ in crore
	Current assets
	108227.04
	113916.34
	Inventories
	6413.93
	5746.65
	Current liabilities
	99051.97
	107667.9
	Acid test ratio
	1.0278757
	1.0046605
( C) Cash ratio: This ratio is calculated by dividing the cash and cash equivalents of the company by its total current liabilities.

Each student is required to complete a 5-10 page Term Paper on a public Company. The Term Paper must include the following and support your calculations by stating your assumptions: 1. Provide sources...

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