L&T net jumps 27% but slashes order guidance to trickle on Gulf crisis, domestic slowdown

MUMBAI: Engineering major L&T, which on Saturday reported 27 per cent rise in net for Q2 at Rs 1,820 crore, has massively slashed its earlier guidance for orders inflows to a low single-digit, citing turmoil in the Gulf and the still lingering domestic slowdown but maintained earlier view on revenue growth.

In the beginning of the year, Larsen & Toubro had guided for a 12-14 per cent rise in order inflows for the year, expecting a quicker turnaround in the domestic economy post-demonetisation and firm international orders.

On the revenue side, however, it has maintained its guidance of 12 per cent increase for the financial year.

At the consolidated level, including profits from the two listed arms, its net income rose to Rs 2,020.30 crore from Rs 1,532.15 crore.

In the year to March 2017, the company had won orders worth Rs 1.42 trillion.

But the GST roll-out from July 1 has slowed the economy, while the note-ban impact lingered to the first quarter when the GDP slowed down to a three-year row of 5.7 per cent. Confounding the matter further is the ongoing political turmoil in West Asia in general and Saudi Arabia in particular.

"We are seeing a fair amount of headwinds in the Gulf region which has been our forte. On the domestic front, though a number of projects and schemes are being announced in the country, due to various reforms undertaken by government, there is a slowdown in the tender process," S N Subrahmanyan, managing director & chief executive, told reporters.

For the reporting quarter, the company's income rose to Rs 26,848 crore from Rs 25,474 crore a year ago.

"We had given a guidance of 12-14 per cent growth in order inflows for this fiscal. However, going by the present environment both in the domestic and international markets, we think we will be able to achieve only a marginal growth in order inflows this year," R Shankar Raman, group CFO, said without offering to quantify the same.

But he maintained the earlier revenue guidance of 12 per cent increase for this financial year.