HEADWINDS TO STAY AS L&T MISSES ORDER INFLOW GUIDANCE

Conglomerate expects private capex cycle to remain muted in FY18

Engineering conglomerate Larsen & Toubro (L&T) has missed its order inflow and revenue guidance for the financial year 2016-17, and the company expects headwinds to continue in the current financial year. For the quarter ended March 2017, the company reported a net profit of ~3,024.61 crore, 30 per cent more than ~2,335.20 crore reported in the same period a year ago. The company’s revenue was at ~36,830 crore, 12 per cent up from ~32,880 crore in the corresponding period of 2016.

Engineering conglomerate Larsen & Toubro (L&T) has missed its earlier order inflow and revenue expectation for the financial year 2016-17, and the company expects the headwinds to continue in the current financial year.

For the quarter ended March, the company reported a net profit of ~3,025 crore, 30 per cent more than ~2,335 crore reported in the same period a year ago.

The company’s revenue was at ~36,830 crore, 12 per cent up from ~32,880 crore in the corresponding period of 2016. In a Bloomberg poll, analysts estimated a net profit of ~2,650 crore for the March quarter.

“In our assessment, the performance has been satisfactory in the backdrop of the current environment and policies,” said Shankar Raman, chief financial officer, L&T.

Earnings before interest, taxation, depreciation and amortisation (Ebitda) were lower by four per cent year on year at ~4,340 crore. “Ebitda is lower due to impairment arising out of sales of assets and provisioning related to our financial service business,” Raman added.

The company’s order inflow for the financial year 2016-17 was at ~1.43 lakh crore against ~1.36 lakh crore in the financial year 2015-16, a growth rate of 5 per cent.

In its revised expectation for the financial year 2016-17, the company had expected 10 per cent growth in its order inflow and revenue from operations. For the year 2016-17, the company reported revenue growth of eight per cent.

For the current financial year, the company expects the order inflow to grow in the range of 12-14 per cent and a revenue increase at around 12 per cent.

“We expect order inflow growth to come from sectors like power, hydrocarbon, infrastructure, and defence,” said A M Naik, group executive chairman, L&T.

Naik said the company missed its expectation due to delays in awarding projects. “As we go into the new year, it continues to be very challenging,” Naik said.

Naik does not expect the private capex cycle to revive in the current financial year and expects government spends to drive most of the new investments.

He said banks were flush with funds, but wary of lending to sectors which needed them the most. “Banks now have liquidity, but whom would they give it to,” Naik asked.

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