L&T Beats Es­ti­mates, Sets Big­ger Tar­gets

Q4 NET RISES 69% Chair­man AM Naik sees de­mand pick­ing up soon on new govt’s in­fra push, ex­pects 15% rev­enue growth in FY15

The Economic Times - - Companies - OUR BUREAU

Larsen & Toubro has set healthy­look­ing growth tar­gets for 2014-15 af­ter ex­ceed­ing es­ti­mates for the past fis­cal year, as the en­gi­neer­ing ma­jor is con­fi­dent of a re­cov­ery in de­mand from an ex­pected in­fra­struc­ture push by the new govern­ment.

“With the change in govern­ment, we see im­prove­ment com­ing sooner than we had ex­pected,” chair­man AM Naik said on Fri­day. “With im­pe­tus to in­fra­struc­ture, ef­forts to boost other sec­tors and the pos­si­bil­ity of pri­vati­sa­tion of de­fence, we are well po­si­tioned to get or- ders,” Naik said.

Prime min­is­ter Naren­dra Modi has promised to work to­wards turn­ing around the econ­omy, and in­fra­struc­ture is ex­pected to be one of the fo­cus ar­eas to drive over­all growth. Higher in­fra­struc­ture spend­ing would ben­e­fit L&T, the na­tion’s largest en­gi­neer­ing and con­struc­tion com­pany.

Modi’s pro-busi­ness im­age has al­ready started re­flect­ing on mar­ket sen­ti­ment, with the bench­mark stock in­dex set­ting a record high af­ter his elec­tion. The im­proved mar­ket sen­ti­ment has made the com­pany to start work­ing to­wards list­ing two of its units — L&T In­fotech and L&T Tech­nol­ogy Ser­vices — by 2016.

L&T ex­pects new or­ders to grow 20% in the fis­cal year that be­gan on April 1, and rev­enue to ex­pand 15%. Still, Naik cau­tioned that given the slow­down in the sec­tor, the re­cov­ery would take time to set in. “It would be a few months, may be by Au­gust-Septem­ber,” he said. Fi­nanc­ing of new projects would be key given the deficit the govern­ment faces and its huge out­stand­ing pay­ments, Naik said, while ask­ing the govern­ment to take care of these be­fore start­ing the ten­der­ing process. Naik said the pri­vate sec­tor may take longer to get back on its feet. “Pri­vate sec­tor would take longer to start in­vest­ing be­cause we still need a lot of fi­nan­cial re­forms. A lot of groups that are our cus­tomers are not in a mood to go ahead them­selves as they are clean­ing up their bal­ance sheet.” Poor fi­nan­cial health of de­vel­op­ers and de­lays in projects forced L&T to write off or­ders worth .` 15,000 crore in the last fis­cal year, as re­ported by ET on April 3. The com­pany said its or­der book of .` 1.63-lakh crore does not have any more slow-mov­ing or­ders. Or­der ex­e­cu­tion picked up in the fi­nal quar­ter of fis­cal 2014, help­ing L&T post net rev­enue of .` 20,079.10 crore, up 11% year-on-year de­spite chal­leng­ing mar­ket con­di­tions. Its net profit in the Jan­uaryMarch pe­riod soared 69% from a year ear­lier to .` 2,723.48 crore. Ac­cord­ing to Reuters, the aver­age es­ti­mate was for a profit of .` 1,615 crore. Dur­ing the fis­cal year, L&T’s sales rose 10% to .` 56,598.92 crore, while net profit in­creased 25% to .` 5,493.13 crore. The com­pany said it is work­ing on a plan to list its toll road as­sets in Sin­ga­pore via an ini­tial pub­lic of­fer­ing of a busi­ness trust. But the change in the govern­ment has boosted sen­ti­ment and led it to also re­vive the IPO plan for the two tech­nol­ogy arms.

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