Today, the favorite stock of the investor community, L&T, slipped below the psychological Rs.1000-mark on the BSE Sensex. Last time, the share price of this capital goods company had slipped below the 4-figure mark on October 8, in the midst of the 2008-recession.
Thus, if you would have invested in L&T three years back, your money would have yielded your virtually no returns, except for the dividend income earned during the tenure. However, you could have doubled your money if you had sold your positions at the start of November 2010. But, as we all know, timing the market entry/exit is the toughest part of this game.
To add to the woes, the capital goods production for October 2011 contracted by 25.5%, indicating significant slowdown and tepid demand scenario in the industry. In fact, the IIP data for the month had witnessed a sharp de-growth by 5.1%, signaling overall slowdown in the Indian economy.
However, to the delight of L&T investors, the company’s outstanding order book size has almost reached Rs.1.5 lakh crore, which is 3.4 times their FY2011 revenue.