L&T net up 53%, beats estimates AMRITHA PILLAY
Engineering conglomerate Larsen & Toubro (L&T) reported a 53 per cent jump in consolidated net profit in the December quarter (Q3) to ~14.9 billion. New orders also saw a revival after a lull in the first two quarters of this financial year.
The firm hopes to continue the momentum but says government decisions taken in the run-up to the election year of 2019 will be crucial.
Revenue from operations rose 10 per cent to ~287.5 billion from the same period a year before. Earnings before interest, tax, depreciation and amortisation was ~31.4 billion or 25 per cent higher; analysts had estimated ~28.77 billion. “A very satisfactory quarter, with welcome relief on the order inflow side with growth of 38 per cent. We have been able to convert orders to revenue, seeing a 10 per cent growth there,” said Shankar Raman, director and chief financial officer. The infrastructure, hydrocarbon and heavy electrical segments all contributed.
Order inflow numbers were clearly a positive surprise. In a Bloomberg poll, analysts had estimated consolidated net profit of ~13.94 billion on revenue of ~284 billion. Even after adjusting for one-off items, the company said recurring net profit was up 48 per cent at ~14 billion. In November, L&T revised its order inflow expectation in the current financial year to flattish, owing to weak order inflow seen in the first two quarters.
However, the company saw a rebound in orders in the December quarter, leading to 38 per cent growth in order inflow to ~481.3 billion, against the earlier expectation of up to ~400 billion. With this, the total outstanding order book is ~2.7 trillion; L&T expects to end the financial year with 75 per cent of this from the domestic market. Despite the significant improvement here, the company maintained its revised forecast of flat growth in order inflow and 12 per cent growth in revenue for the current financial year.
S N Subrahmanyan, managing director, said: “It depends on three factors. One, the (Union) Budget and which direction it is going to take; there could be a tilt to the social sector and capex could be lower or the same as last year. The other is if oil moves up, the Middle East will be good for us. The third factor is it (2019) being the election year, decision making could get slowed. Since private capital has slowed, a lot will depend for us on government spending, with the central elections and four state elections.”
In the quarter, the companies also provisioned for receivables worth ~2 billion, which L&T said were claims pending with firms going through the proceedings at the National Company Law tribunal and other liquidation processes.