L&T started investing in defence around the same time as its diversification into IT. While the latter has been hived off in the last decade, and is commanding a hefty market cap, defence is still away from becoming a USD1 billion topline business. As the indigenisation drive and rising exports makes defence a sunrise sector, L&T stands to gain.
Larsen & Toubro (L&T) is by far the largest engineering and construction company in India. Over the past year, the stock has returned 55% against Nifty 50’s 21% gains. Despite high past returns, the stock is still undervalued. And this has a lot to do with its defence business. Through the years, L&T has diversified into finance, information technology and defence. Its listed subsidiaries in finance and IT command premium valuations,
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